TS can borrow from RBI’s overdraft facility
Govt. left with ₹ 2,500 crore borrowing capacity until end of June
In anticipation of a drop in income of ₹ 3,000 to ₹ 4,000 due to the foreclosure in May, the state government was considering borrowing money from the Bank’s Ways and Means Advances and Overdraft Facility. Reserve Bank of India (RBI) to consolidate its resources in June. .
The government has already raised ₹ 5,500 crore through securities and bonds so far this quarter and was left with borrowing capacity of ₹ 2,500 crore through the end of June .
With revenues declining and the pledge to shell out ₹ 7,000 crore to Rythu Bandhu in June, officials said there was no option but to resort to ways and means and OD.
It was precisely the tight financial situation of the Telangana government that prompted Finance Minister T. Harish Rao to demand an increase in the FRBM limit up to 5% of the GSDP at the GST Council meeting on Friday.
The Center relaxed FRBM standards last year due to the first wave of COVID and gave them permission to borrow up to 4%, a 1% increase from the regular rate.
At four percent, the government’s credit exposure for 2021-2022 was ₹ 41,000 crore.
Of this amount, ₹ 8,000 crore would be used up by the end of June. But, officials said a recurring loss of income of 3,000-4,000 crore per month under current circumstances would far exceed ₹ 41,000 crore.
As one more percent of the FRBM limit hike would have given the government more leeway since it would bring in an additional ₹ 10,000 crore, the Center was asked to concede the same at the meeting of the GST council on Friday, sources said.