Telangana Finance Minister and Deputy Chief Minister Mallu Bhatti Vikramarka faces a tough task in balancing spending on welfare schemes and managing fiscal discipline, as he gets ready for presenting his second Budget on Wednesday.
The Budget size for 2025-26 is likely to be in the range of ₹3.1-3.3 lakh crore as against the last year’s size of ₹2.91 lakh crore. The capital expenditure would be around ₹40,000 crore as against last year’s projections of ₹33,500 crore.
The key challenge for him is to mobilise resources to pay salaries and pensions. This would require ₹6,500 crore. While debt servicing takes another ₹6,500 crore, the State is left with just ₹5,500 crore in the monthly income of ₹18,000-18,500 crore.
“I would require ₹18,000 crore more to implement the 20-25 welfare schemes and pay pending bills,” the Chief Minister said, quoting an Urdu saying ‘upar sherwani andar pareshani’ (looking grand from outside but very weak inside).
The debt burden is mounting by the month. Of the ₹1.60 lakh crore debt that the Congress Government raised in the last 15 months, over ₹1.50 lakh crore was spent on the payment of principal and interest.
That the State had to take a ‘hand loan’ of ₹4,000 crore last month to pay salaries to over 3.69 lakh government employees 2.80 lakh pensioners reflects how precarious the State’s condition is. In Chief Minister A Revanth Reddy’s words the State’s economy is in a precarious condition as his government inherited a financial condition, which he described, in advanced cancerous condition.
Telangana’s Gross State Domestic Product (GSDP) reached Rs. 14,63,963 crores at current prices, showing an 11.9% increase from the previous year, compared to a national growth rate of 9.1 per cent. The State’s debts surged from Rs. 75,577 crores at its formation to Rs 6,71,751 crores within 10 years.
Vikramarka, who inherited a loan burden of Rs 6.71 lakh crore, had described the financial condition as ‘precarious’ when he submitted his maiden budget last year. After a year, the situation has further worsened as he had to borrow another Rs 1.60 lakh crore.
“The previous Government has reduced the Government to such a sad state that loans had to be raised to repay loans,” he said.
The situation, however, is still continuing, leaving the State Government to delay salaries to certain categories of employees such as anganwadi and contract employees.
Capital expenditure
In the last Budget, he proposed a capital expenditure of Rs 33,500 crore or about 11 per cent of the Budget size. As we await the actual spending figures, the anticipation is that the Government is expected to allocate funds to the Musi Riverfront Development project and the Regional Ring Road.
The Future City Project, a pet project of the Chief Minister’ is also expected to see some focus in the Budget. Sources said the Government is also planning to introduce a Fund of Funds to promote startups, particularly in the areas of artificial intelligence and health tech.
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