Starved of funds to meet the deficit, it has been a tough journey for Telangana to meet the targets set for welfare and developmental works. It is not going to be an easy task for the TRS government in the final year of its second term, which incidentally is an election year. Adding to its woes, the macro conditions globally too are not favourable. 

The Socio-Economic Outlook for 2023, which analyses the State of economy of Telangana, is well aware of this fact. “Additional resource mobilisation might be a challenge in the backdrop of global recession, which is disrupting economic growth,” it admits.

The State’s financial health improved quickly after it was battered severely during the Covid. The State’s Own Tax Revenues (SOTR) too has seen an upward trend in the last two years. But the State was starved of funds when it required it the most. While the State banked on inflow of funds via borrowings to the tune of ₹56,000 crore, the Centre cut its eligibility under the FRBM norms by ₹15,000 crore. “Due to the cut imposed on market borrowing and the shortfall in grants from the Centre, there is a severe strain on the State finances,” the Outlook lamented.

The revised estimates for fiscal deficit for 2021-22 was put at ₹44,766 crore. For 2022-23, it is pegged at ₹52,167 crore, which is 16.5 per cent more than the last year’s figure.

Besides, the State refused to take the bait offered by the Centre in the form of enhancement of the borrowing limit by 0.5 per cent, if the State agrees to power reforms.

A senior Government official, however, said there was enough room for optimism as the State was on the way to meet its budgetary own tax revenue target for 2022-23. Keeping in mind, the political tussle between TRS Government and NDA government, the situation is unlikely to change.

The State can tap the extended the 50-year interest-free loan scheme announced by the Centre that seeks “to spur investments in infrastructure and to incentivise them for complementary policy actions”.

Key indicators

Despite the hurdles, the State’s Gross State Domestic Product (GSDP) for 2022-23 stood at ₹13.27 lakh crore, showing a growth of 15.60 per cent over the last year’s figure. Compared to 2019-20, unemployment rates have fallen in both rural and urban areas, and for men as well as women, reflecting the growth in the economic activity.

Of all sectors, agriculture emerged as the largest employer, providing livelihood to 45.8 per cent of all working adults.

Own tax revenue

Telangana’s State own tax revenues (SOTR) as a proportion of Gross State Domestic Product (GSDP) is 7.21 per cent, which is the second highest among 18 ‘General States’ in the country.

“The State’ SOTR accounted for 65.4 per cent of its Revenue Receipts on average, higher than the national average of 48 per cent,” the Outlook said.

The SOTR growth rate stood at 4.78 per cent, as against the average growth of 1.5 per cent in 18 ‘general States’.