Published Mar 31, 2026 | 4:04 PM ⚊ Updated Mar 31, 2026 | 4:04 PM
Representational image. Credit: iStock
Synopsis: The latest CAG audit reports expose Telangana’s worsening fiscal health. Revenue surplus turned into a ₹9,420 crore deficit in 2024–25, with only 76 percent of the budget utilised. Rising debt, opaque guarantees, and failing public sector units deepen the crisis. The Kaleshwaram project exemplifies poor planning, while urban services and health infrastructure remain severely deficient.
The latest audit reports of the Comptroller and Auditor General (CAG) have raised serious concerns over Telangana’s financial health and governance.
The reports include the audited Finance Accounts for 2024–25, tabled in the State Legislature on 30 March, along with several compliance and performance audits.
Together, they paint a troubling picture. They point to systemic underperformance across sectors. They also show a steady decline in fiscal discipline.
Earlier audits, including the State Finances Audit for 2022–23 and the 2024 performance audit on the Kaleshwaram project, had already flagged concerns. The latest findings for 2023–24 and 2024–25 show the situation has worsened.
The reports highlight poor financial management. They point to inefficient project execution. They flag weak public sector units. They also reveal failures in urban services and social infrastructure. The issues reflected a pattern.
There is poor planning and budget utilisation was low. Revenue collections have fallen short. Investments have not delivered results. Together, these have pushed the state towards fiscal fragility and slowed development.
The most serious concern is the sudden shift to a revenue deficit. Telangana had recorded a revenue surplus of ₹779 crore in 2023–24. This turned into a deficit of ₹9,420 crore in 2024–25. Budget estimates had projected revenue receipts of ₹2.21 lakh crore. But actual spending was far lower.
Only 76 percent of the budget was utilised. This amounts to ₹1.68 lakh crore against the estimate of ₹2.21 lakh crore. Revenue expenditure also fell short. It reached only 80 percent of the estimates.
This low utilisation raises concerns over budgets were based on unrealist assumptions. It also points to delays and inefficiencies in implementation. Committed expenditure continues to take up a large share.
About 41 percent of revenue receipts were spent on salaries, wages, pensions, and interest payments. This leaves limited room for development spending. Government guarantees have increased sharply, rising to ₹2.41 lakh crore by the end of 2024–25. This is an increase of ₹21,000 crore.
CAG flagged lack of transparency in these guarantees. It pointed out gapss in compliance with accounting standards under IGAS-1. There was no clear data on invoked guarantees or separation of principal and interest.
The state also relied heavily on Ways and Means Advances and short-term borrowings. This indicates cash flow stress. It also raises concerns over debt sustainability. Public debt remained high. Off-budget borrowings continue to be a concern. These hide the true fiscal position. They also raise questions about long-term sustainability.
The Kaleshwaram Lift Irrigation Project has emerged as the most striking example of underperformance.
The project was initially estimated at around ₹82,000 crore. The cost has now risen to over ₹1.47 lakh crore. Its Benefit-Cost Ratio has fallen sharply. It now stands at 0.52. This means every rupee invested yields only 52 paise in return. The project is now considered economically unviable.
The CAG’s performance audit flagged serious planning failures. Contracts were awarded before detailed project reports were finalised. Works were taken up without full approvals. There were also redundant and incomplete components, adding to the cost. Off-budget financing added to the debt burden.
At the same time, actual irrigation benefits remained far below targets. In addition, more than ₹4,000 crore allocated to the irrigation sector remained unspent. This shows weak monitoring and execution. The project, once seen as a game changer for agriculture, is now viewed as a major fiscal strain.
The report pointed out that the state’s public sector enterprises were struggling. Telangana has 18 State Public Sector Enterprises. Of these, 11 are loss-making. Their total losses stand at ₹11,970 crore. Nine companies have completely eroded their net worth. Their combined negative worth is about ₹51,000 crore.
Nearly 20 percent of these enterprises are defunct. Many have pending accounts. This points to poor governance and lack of accountability. The Singareni Collieries Company, which is a key revenue contributor, is also facing issues.
The audit flagged contract irregularities and operational inefficiencies. Overall, these enterprises have not contributed meaningfully to the state economy. Instead, they have become a financial burden. They depend on repeated government support. Investments remain unrecovered.
The CAG found major gaps in solid waste management across Urban Local Bodies. There is no clear state policy. Roles and responsibilities are not defined. There are no timelines for waste segregation, processing, or disposal. Segregation at source was minimal. Processing facilities are either inadequate or not working.
Old garbage dumps continue to grow. Construction and demolition debris is also not being managed properly. These failures pose serious risks and they affect public health, besides harming the environment. Funds allocated for these services remain underutilised. Monitoring systems are weak or absent.
The Telangana State Industrial Infrastructure Corporation has also been flagged. The audit found irregular land allotments. In some cases, excess land was given without proper conditions for use. There were no penalties for units that failed to set up operations. This led to revenue losses. It also gave undue benefits to private players. Industrial growth has been affected despite large land banks.
In the health sector, the reports said the situation was worrying. There is a 69 percent shortage in Community Health Centres. There are also shortages in primary health centres and sub-centres.
Staff vacancies remain high and drugs worth ₹390 crore were wasted after expiry, exposing the poor inventory management.
