Hyderabad,Oct19(TruthDive): Telangana government has hit a financial roadblock and with near empty treasury, it raised INR 800 crores last Monday through bonds. Tomorrow the Telangana government faces another crisis as contractors are stopping work. INR 2290 crores worth of contract bills have not been paid, as Telangana stopped payment worth INR 1500 crores towards irrigation projects, INR 500 crores to road and another INR 200 crores towards Panchayat Raj works. Contractors have decided that they cannot move forward at this rate, until they are paid their dues.
Three factors have led to this situation. One is that the Telangana government is not able to pass the budget on time, second is diversion of funds to poll promises like crop loan waiver and thirdly it was forced to buy power at high costs. In September, the Telangana government had two major out payments. It paid INR 4250 crores as first part of the crop loan waiver and around INR 1600 crores towards salaries and pension. This big amount came in as Telangana government decided to pay the salary to be paid in October in September end itself since Oct 3 was Dussehra. It raised INR 800 crores at 8.85% interest from bonds but in a week’s time it had to pay INR 120 crores to buy power at 8.50 per unit.
The Telangana finance minister is now operating by getting day to day permission from the Governor to manage essential services as the statutory budget has not been passed by the Assembly. As bills are piling up, the finance ministry has raised a red flag signaling a big crisis in store.
Sources say that after the Telangana ministry came into being, there has been no financial discipline and officials should send bills of only emergency nature till the situation improves but instead various departments are spending or awarding contracts without looking at the coffers. Finance minister who had a meeting with Telangana CM yesterday decided to convene a high level official meet tomorrow to sort out the mess.