HYDERABAD: The Centre’s decision to relax the adjustment standards for state off-budget lending has not gone down well with the Telangana state government. The state government believes that the Centre’s decision was just ‘eyewash’ and would not help the state government raise Rs 55,000 crore through market borrowing for which he had requested the Centre’s approval for this financial year (2022-23).

The Center recently imposed a Rs 19,000 crore reduction in state government market borrowing for 2022-23, citing its huge off-budget borrowing in previous years. The Union Finance Ministry on Thursday relaxed standards saying off-budget borrowing from the last financial year (2021-22) can be adjusted against its borrowing limits for the next four years until March 2026.

In March, the Center advised states that off-budget borrowing should be equated to states’ own debt and that any such funds raised by governments in 2020-21 and 2021-22 should be adjusted out of the ceiling. loan this year.

The Telangana government strongly opposed this on the grounds that any new standards or restrictions should be imposed “prospectively” from this fiscal year and not “retrospectively” taking into account off-budget borrowing from the previous two fiscal years.

In the latest ruling, the Center relaxed the standard saying it will only consider off-budget borrowing from the last fiscal year and even that will be adjusted into the state’s borrowing limit for the next four years until March 2026. Official Finance Department sources said this easing would not help the TS Government much as its main request to impose restrictions “prospectively” has not been met and the Center continues to impose restrictions retrospectively for the previous fiscal year instead of two previous fiscal years earlier. They said it would at most help TS get an additional Rs 5,000 crore out of the Rs 19,000 crore that has been cut by the Center for this year.

The Center has set the net borrowing ceiling for states at Rs 8,57,849 crore or 3.5% of GSDP for this financial year 2022-23. States are also eligible for additional 0.50% borrowing from the GSDP related to power sector reforms. However, the TS government refused to implement energy reforms and decided to waive additional 0.50% loans.

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