If Revanth Reddy Wants The Gujarat Model In Telangana, He Must Rein In Ruinous Freebies

Telangana Chief Minister Revanth Reddy’s remarks in the presence of Narendra Modi stating that the Prime Minister is an 'elder brother' and that he wants Telangana to develop like Gujarat have drawn widespread attention.

The remarks are noteworthy given that he belongs to the Congress party which has consistently critiqued the Gujarat model.

While Reddy's requests like asking the Centre's support for setting up a semiconductor industry in the state and the rejuvenation of the highly-polluted Musi river in Hyderabad should be welcomed, what is also important is that his government gets its priorities right.

That would mean reducing the spending on freebies the Congress had promised in Telangana.

After all, within days of coming to power, the Congress brought out a white paper on the poor state of the state's finances.

The amount to be spent on Rahul Gandhi's much-touted six guarantees is Rs 53,196 crore, which is 19.3 per cent of the state's total outlay of Rs 2.75 lakh crore.

The white paper claims that the debt has shot up to Rs 6.71 lakh crore in the last decade.

If Reddy insists on fulfilling the guarantees, the state's debt is only likely to grow under the new government. According to the budget estimates of 2024-25, the fiscal deficit is estimated to rise by around Rs 20,000 crore to Rs 53,227.82 crore from Rs 33,785.83 crore, which is the figure mentioned for 2023-24 as per the revised estimates.

All of the above mentioned figures show that the state is in a difficult financial situation, leaving it with little room to spend on development.

For proof that ruinous guarantees of these kind make spending on development difficult for governments, he doesn't have to look any farther than neighbouring Karnataka, which is also ruled by his party.

Karnataka Deputy Chief Minister D K Shivakumar in July 2023 said that it would not be possible to allocate funds for development in that fiscal due to the need to implement the Congress party's guarantees made ahead of the elections.

The basic necessities are anyways partly taken care of by the Centre. These include schemes like the one for free food grains under the PM Garib Kalyan Yojana, housing through the PM Awas Yojana, and water through the Jal Jeevan Mission.

Even on the issue of free electricity, the Centre has now come up with the Surya Ghar Yojana, under which it is estimated that 1 crore households would get 300 units of free electricity.

The scheme gives both BJP and non-BJP states a convenient way to put an end to their free electricity schemes, something that would otherwise be politically suicidal.

Therefore, what Reddy should be doing instead, is cutting down on freebies, providing incentives over and above what the central government is giving in order to attract industries to the state and focus on job creation.

For example, he could sweeten the deal further for firms looking to set up shop in the state utilising the benefits under the production linked incentive scheme.

Once industries and investments come in, it would result in economic growth and Reddy can go to polls banking on that record.

If not, five years later, the opposition will have a ready-made draft in the form of his government's 2023 white paper to compare his performance to, and he wouldn't come out looking good.