KCR has said states must be given more independence in financial affairs. (File)

Telangana Chief Minister K Chandrashekar Rao presented a bleak picture of not just the state's economy but that of the country as he presented his annual budget proposals, paring spending by nearly 20 per cent from what was presented in the vote-on-account budget in February.

"I regret that I am presenting the state budget for 2019-20 in the House when both the centre and state are going through a severe financial crisis. We have to tread carefully and cautiously during such a testing time. We cannot go beyond certain limits," he said.

Known popularly as KCR, the Telangana Rashtra Samithi (TRS) chief pointed out that the estimates presented in the vote-on-account and budget proposals were vastly different for the centre as well as the state.

The budget has been downsized from Rs 1.82 lakh crore to Rs 1.46 lakh crore because revenues have fallen steeply, KCR said. Telangana had anticipated 15 per cent growth in tax revenue in 2019-20 whereas in the first quarter of 2019-20, only 5.46 per cent was realised.

He also noted that the central government had expected a tax growth of 22.69 per cent in 2019-20 but ended up achieving only 1.36 per cent.

The central government alone decides the broad fiscal policies of the country and the states including Telangana have no option but to fall in line, the chief minister said. KCR has in the past too said that the centre plays an excessive role and states must have a bigger say in how finances are raised, allocated and spent.

In the last five years, KCR said, Telangana had contributed RS 2.7 lakh crore in the form of taxes to the central kitty while it got only Rs 31,802 crore as central devolution.

Pointing out the sectors in which Telangana has taken a hit, he said in the last five financial years, Telangana recorded an average of 13.36 per cent growth rate in commercial taxes whereas in the first four months this financial year, it is only 6.61 per cent.

KCR said that the worst situation is in motor vehicle tax which recorded a 19 per cent growth rate in the last five years but has now declined to minus 2.06 per cent in the first four months of 2019-20.

Non-tax revenue is down to minus 14.16 per cent from a growth rate of 14.9 per cent in the last five years - a fall of 29 per cent.

KCR said the centre had cut the state's share in central taxes devolution by 4.19 per cent and said allocation in several items has been reduced. He also said the reason the state was not implementing Ayushman Bharat health scheme was because under the central programme, only Rs 250 crore was allocated to cover 26 lakh families whereas Aarogya Sri, the state medical insurance scheme, covered over 85 lakh families and the state spent Rs 1,336 crore on it.

The chief minister said that despite all this, Telangana was doing much better than many other states and gave the examples of Punjab, Karnataka and Haryana which he said had recorded negative growth rates.

KCR knows his welfare measures have won him elections and therefore has made sure allocations continue for them. So, the farmer assistance scheme Rythu Bandhu has been given Rs 12,000 crore, farmer insurance Rythu Bima Rs 1,137 crore, crop loan waiver Rs 6,000 crore, power subsidy esspecially to the agriculture sector is at a record Rs 8,000 crore and pension scheme Aasra has been allocated Rs 9,042 crore.

Congress leader Bhatti Vikramarka said the KCR government inherited a revenue surplus state but his vision and policies had left it in the red, with a huge debt.

BJP leader Krishnasagar also took a dig at the Chief Minister, saying he had made the new finance minister T Harish Rao, a dummy right from day one, by presenting the budget himself in the state assembly.

He said misgovernance by KCR was responsible for the economic slowdown in Telangana and said the state's finances are in a serious mess as he lacked fiscal prudence, discipline and vision.

"State budget is a narrative of white lies. It hasn't highlighted the factual situation of a debt-ridden state where majority of payments are going towards payment of high interests on debts than investment into capital expenditure for wealth creation," he said.

The BJP said KCR is being escapist in blaming the central government in reducing allocations for the state. "The CAG has clearly exposed this government's massive mismanagement of central funds and diversion to CM's pet projects," it said.