Telangana’s Finance Minister and Deputy Chief Minister Mallu Bhatti Vikramarka faces a significant challenge as he prepares to present his second budget on Wednesday. He must strike a balance between funding welfare initiatives and ensuring fiscal responsibility.
The projected budget for 2025-26 is expected to range from ₹3.1 lakh crore to ₹3.3 lakh crore, an increase from last year’s allocation of ₹2.91 lakh crore. Capital expenditures are anticipated to reach approximately ₹40,000 crore, up from last year’s estimate of ₹33,500 crore.
A primary concern for Vikramarka is securing sufficient resources to pay salaries and pensions, which alone will require around ₹6,500 crore. Additionally, debt servicing will absorb another ₹6,500 crore, leaving the state with only ₹5,500 crore from its monthly revenue of approximately ₹18,000 to ₹18,500 crore.
To effectively manage the roll-out of 20-25 welfare schemes and to settle outstanding bills, the Chief Minister indicated that an additional ₹18,000 crore would be necessary. He aptly quoted an Urdu saying, describing the situation as “looking grand from the outside but very weak inside.”
The state’s debt is escalating rapidly; of the ₹1.60 lakh crore debt accumulated by the Congress government in the past 15 months, over ₹1.50 lakh crore was allocated for paying off principal and interest. This growing debt crisis was underscored when the state had to secure a ‘hand loan’ of ₹4,000 crore last month to ensure that salaries were paid to more than 3.69 lakh government employees and 2.80 lakh pensioners, revealing the precariousness of the situation. Chief Minister A Revanth Reddy has characterized the state’s fiscal status as dire, likening it to an “advanced cancerous condition.”
According to recent figures, Telangana’s Gross State Domestic Product (GSDP) reached ₹14,63,963 crore at current prices, marking an impressive annual growth of 11.9%, compared to the national growth rate of 9.1%. However, the state’s debt has surged alarmingly from ₹75,577 crore at its inception to ₹6.71 lakh crore within a decade.
Vikramarka, who took office inheriting a loan burden of ₹6.71 lakh crore, expressed concern about the fragile financial state of affairs. After another year, conditions have deteriorated, necessitating an additional borrowing of ₹1.60 lakh crore. He pointedly remarked on the previous government’s mismanagement, highlighting that loans were taken merely to repay existing debts.
As the budget presentation approaches, some categories of state employees, including anganwadi and contract workers, have experienced delays in salary payments due to the ongoing financial challenges. Last year’s budget projected a capital expenditure of ₹33,500 crore, representing approximately 11% of the total budget size. Anticipation surrounds the actual spending figures, particularly regarding allocations for the Musi Riverfront Development project and the Regional Ring Road.
The Future City Project, a key initiative for the Chief Minister, is also expected to receive attention in the upcoming budget. Reports suggest that the government plans to introduce a Fund of Funds aimed at promoting startups, especially in the sectors of artificial intelligence and health technology.
