Welfare schemes are becoming a heavy drag on the finances, and the state would be hard-pressed to bridge the gap between expenditures and revenue.
Published Mar 18, 2025 | 1:33 PM ⚊ Updated Mar 18, 2025 | 3:03 PM
Finance Minister Mallu Bhatti Vikramarka presenting the Telangana Budget. (X)
Synopsis: The Revanth Reddy-led Congress government is ambitious but it has no funds, and it would have to borrow heavily from financial institutions. The Centre’s help is also something that it cannot count on since it is a non-NDA government in the state saddle.
Telangana’s Deputy Chief Minister Mallu Bhatti Vikramarka will present the state’s Budget for the financial year 2025-26 on Wednesday, March 19.
It is likely to be all hat and no cattle, an optically alluring Budget whose size might cross the ₹3 lakh crore mark.
Welfare schemes are becoming a heavy drag on the finances, and the state would be hard-pressed to bridge the gap between expenditures and revenue. The state’s finances are off-kilter, with receivables taking a nosedive and commitments going north.
The state cannot go in for additional taxation as it would mean risking a political recoil from the people.
Telangana Governor Jishnu Dev Varma gave an inkling of what to expect from the Budget when he addressed both Houses of the Telangana legislature on 12 March. He spoke highly about the state’s plans for improving infrastructure, giving a fillip to industries and according priority to social justice.
Tight-rope walk for Vikramarka
Vikramarka, who is also the Finance Minister, will be under pressure to make announcements on the yet-to-be-implemented promises the Congress had made to the people.
The promises includethe Kalyanamasthu Programme, under which it had promised ₹1 lakh and 10 grams of gold to women at the time of their marriage; Mahalakshmi, under which monthly assistance of ₹2,500 would be provided to women, and electric scooters for girl students.
The 2024-25 Budget projected a revenue of ₹2.91 lakh crore, but at the end of the year, it may fall short of the target, settling at ₹2.3 lakh crore. The Budget 2025-26 might be no different as the year progresses, as it has to use the scant resources for ongoing welfare schemes, including Rythu Bharosa, reimbursement of expenditure incurred by the RTC for providing free travel for women, highly subsidised LPG supply, and free power supply to households.
Chief Minister A Revanth Reddy gave a sneak peek into the state’s finances recently at a function in Hyderabad. He said the state had inherited a “financial cancer” from his predecessor, K. Chandrashekar Rao, which had hamstrung his government in spending generously on welfare schemes.
He said the government was paying ₹6,500 crore every month towards debt servicing on the loans the BRS government had borrowed. The state’s income per month is about ₹18,000 crore, of which ₹6,500 crore goes towards salaries and pensions.
Burden of welfare
The state government is left with just ₹5,500 crore to implement welfare schemes. He said that if the state had to implement all the welfare schemes, it would require an additional ₹18,000 crore.
In this backdrop, the state, undaunted, is trying to take up big-ticket projects like the Musi Rejuvenation, an extension of Hyderabad Metro, Future City, organising a Miss World pageant, and Regional Ring Road, which it believes would spur economic activity.
The government may be right, but for that to happen, it has to invest first. As it has no funds, it would have to inevitably borrow heavily from financial institutions. The Centre’s help is also something that it cannot count on since it is a non-NDA government in the state.
The state government, in the Budget, is likely to indicate the central government as the source of finances for these projects. But is unlikely that it may have any relief there.
The central funds always arrive in fits and starts to the state. In neighbouring Andhra Pradesh, the Centre is overly munificent as the TDP is one of the two parties propping up the central government.
Even if the grants arrive for Telangana, they would be minuscule in comparison to the state’s Budget size, hardly exceeding 30 percent.
If the previous Budget is any indication, the dependence on loans would be much higher this time.
Last year, it had proposed to raise ₹57,112 crore from open market loans. Again, the same exercise might be taken up, showing bloated figures for the outlandish welfare schemes.
The revenue in the last 10 months till February was about ₹1.8 lakh crore, while the entire year’s projection was ₹2.9 lakh crore. This includes the state’s revenue, central grants, and loans. The average income thus was ₹18,000 crore per month, as indicated by Revanth Reddy.
There is also pressure on the government to enhance the allocation of funds to various departments like power utilities, the irrigation department, and infrastructure projects.
This apart, the expenditure estimates in the previous Budget have gone up more than the projections, such as debt servicing, which went up to ₹22,056 crore as against the projected expenditure of ₹17,729 crore.
If all heads are taken into account, the increase was more than 20 percent of the estimated liability. The year 2025-26 would be no exception — and it might even be worse.
(Edited by Majnu Babu).
