Telangana has recorded a fiscal deficit of Rs 9,389 crore and revenue deficit of Rs 5,037 crore in just two months of FY 2025-26. Rising subsidies and low capital spending are intensifying pressure on the State’s finances
Hyderabad: Telangana’s fiscal position remained under pressure in the first two months of the current financial year 2025-26. While the revenue deficit stood at Rs 5,037.39 crore, against a revenue surplus budget of Rs 2,738.33 crore presented earlier this year, the fiscal deficit had already reached Rs 9,389.90 crore as of May 2025, compared to the estimated fiscal deficit of Rs 54,009.74 crore for the entire year.
The primary deficit was pegged at Rs 5,223.55 crore, indicating that even before interest payments, the government was spending more than it earned.
According to the latest Comptroller and Auditor General (CAG) report for May, the total receipts stood at Rs 32,823 crore, or 11.52 per cent of the annual budget estimates of Rs 2.84 lakh crore. Of this, Rs 23,425 crore came from revenue receipts, comprising Rs 22,609 crore in tax revenue and just Rs 729.93 crore in non-tax revenue. Grants from the Central government remained negligible at a mere Rs 86.73 crore.
Tax revenue saw a marginal increase of around Rs 200 crore compared to last May, despite improvement in collections from Stamps and Registrations, Sales Tax and the State’s share in Central taxes. GST and State Excise duties remained lower than last year.
Despite reasonably healthy tax collections, revenue generation is yet to match the pace of spending, with total expenditure touching Rs 31,740 crore, which is about 12.05 per cent of the budgeted Rs 2.63 lakh crore. Further, the government has already spent over 31 per cent (Rs 5,199 crore) of its annual subsidy allocation of Rs 16,345.23 crore within two months. This is a huge departure from the same period last financial year, when it stood at 12.81 per cent of annual allocations.
Capital expenditure remained low at Rs 3,277 crore, which is just 8.98 per cent against the target of Rs 36,504.45 crore, suggesting that infrastructure creation has taken a back seat. This could stall growth in the medium term and raises concerns about crowding out development expenditure in favour of recurring obligations.
Meanwhile, net market borrowings shot up to Rs 9,389.90 crore, against an annual outlay of Rs 54,009 crore, raising concerns over the mounting debt burden on the State.
While tax revenue growth held steady, the sharp rise in committed liabilities, especially subsidies and pensions, is expected to keep the fiscal pressure high in the coming months.
Telangana’s financial condition at the end of May 2025:
• Revenue receipts – Rs 23,425 crore
• Tax Revenue – Rs 22,609 crore
• Non-Tax Revenue – Rs 729.93 crore
• Grants-in-aid – Rs 86.73 crore
• Borrowings – Rs 9,389.90 crore
• Total receipts – Rs 32,823 crore
• Revenue expenditure – Rs 28,463 crore
• Capital expenditure – Rs 3,277 crore
• Total expenditure – Rs 31,740 crore
• Revenue deficit – Rs 5,037.39 crore
• Fiscal deficit – Rs 9,389.90 crore