Central government seem to be not interested in granting Telangana State the requested Fiscal elbow Room. Any state in the country according to the FRBM act can only take loans equivalent to 3% of its GSDP. Telangana government has requested the Center to relax the limit as the new state has several challenges to met with.
Accordingly the state government has 17398 Crores as loans in the budget for 2014-15 which is 4000 Crore more than the prescribed 3% GSDP limit. The limit has now reached 4.79% of the State GSDP. However despite several requests, the Center remained silent on this issue.
It is said that the state government has lost hopes on this relaxation and is looking for other options. Andhra Pradesh which is suffering from deficit budget had also made similar request but is not granted the relaxation till now by the Center. Telangana is planning to adopt wait and see policy in this issue. The state is expecting relaxation to itself in case AP is granted.
