XV finance panel projects healthy growth in State’s finances in coming years

The XV Finance Commission has forecast healthy financial situation for Telangana over the next five years notwithstanding the concerns over the pace of recovery of the economy which was slowed down by COVID-19 pandemic.

The Commission has projected double digit growth for the State’s GSDP and revenue receipts for the five-year period 2021-22 to 2025-26 while the tax to GSDP ratio is likely to range between 7.5% to 8.3% during the period. According to the assessed own revenue receipts projected in the report, the State’s GSDP is expected to grow from 10.28 lakh crore during 2021-22 to ₹16.25 lakh crore by 2025-26 registering over 10% growth each year.

The own revenue receipts are projected to grow from ₹91,053 crore in 2021-22 to ₹1,55,574 crore by 2025-26. Own tax receipts are projected to grow from ₹78,653 crore to ₹1,35,123 crore during the period. Revenue expenditure during the period is expected to be between ₹91,053 crore and ₹1,18,959 crore, according to the Finance panel’s projections.

The report said the interest payments could constitute 1.3% of the GSDP and the outstanding debt and liabilities as percentage of the GSDP stood at 22.9%. This, according to an official who participated in the meetings convened by the XV Finance Commission, could be a matter of concern.

The indicative debt path of the State government as percentage of the GSDP is pegged little over 29% by the Commission. Interest payment, the Commission’s report said, would be ₹15,931 crore during 2021-22 and this would progressively increase to ₹22,488 crore by the end of 2025-26.

The State continues to be a revenue surplus State with pre-devolution surplus pegged at ₹2,155 crore for 2021-22 and this is expected to reach ₹40,801 crore by 2025-26.

The revenue surplus post devolution is likely to start at ₹15,999 crore in 2021-22 and reach ₹63,347 crore by 2025-26. The State is expected to receive GST compensation of an estimated ₹1,570 crore during the fiscal 2021-22 and this is expected to reach ₹4,186 crore by the end of 2025-26.

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