HYDERABAD: In a major relief to the cash-strapped state government, the Centre on Friday gave its nod to auction government securities to earn Rs 4,000 crore after a gap of two months. The Reserve Bank of India (RBI) will conduct the auction on June 7.
This is the first funds to be raised by the Telangana government through auction of bonds in this fiscal 2022-23. Incidentally, the Centre gave its approval to Telangana to auction bonds a day after Chief Minister K. Chandrashekar Rao made a blistering attack on the BJP-led government at the Centre accusing it of imposing financial restrictions on Telangana arbitrarily and strongly demanded that Centre lift the restrictions to allow the state to raise funds while addressing the Telangana State Formation Day celebrations at Public Garden on Thursday.
The RBI on Friday issued a circular announcing the auction of Telangana bonds on June 7 along with Andhra Pradesh (Rs 2,000 crore), Maharashtra (Rs 4,000 crore) and Tamil Nadu (Rs 2,000 crore).
However, the Centre did not give clarity on whether it still wanted to treat off-budget borrowings as part of state government’s debt and impose cuts on the Telangana government’s auction of bonds accordingly in the leftover 10 months of this fiscal (June-March).
The Centre had halted the auction of Telangana bonds in the new financial year (2022-23) starting from April 1. Telangana had sought permission to raise Rs 15,000 crore through auction of bonds as part of open market borrowings for the first quarter of this fiscal — Rs 3,000 crore in April, Rs 8,000 crore in May and Rs 4,000 crore in June.
The Centre denied approval in April and May on the ground that the Telangana government had secured huge off-budget borrowings of nearly Rs 1.5 lakh crore by way of giving bank guarantees to various corporations. The Centre stated that it would treat these off-budget borrowings as part of the state government’s overall debt and count under FRBM limits, which the state government strongly opposed. This led to confrontation between the Centre and the state government leading to halting the auction of bonds since April.
The state government has proposed to raise a total of Rs 59,672 crore in its Budget 2022-23 through auction of bonds for the current fiscal. It remains to be seen whether the Centre allows to raise the entire amount or impose cuts to adjust off-budget borrowings.
The state government wants to raise another Rs 4.000 crore in June itself totalling Rs 8,000 crore since it was denied Rs 11,000 crore loans in April and May.
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