Telangana maintained a strong focus on capital expenditure, allocating 26.6 per cent of its budget to it, second only to Andhra Pradesh (40 per cent).
Hyderabad: Since its formation in 2014, Telangana under the BRS regime showed remarkable economic growth and development, positioning itself as a leading state in India. The foundation for this growth was laid at the time of State formation, with the government implementing a balanced approach that focused on both supply-side and demand-side policies. This strategic approach led to a steady and impressive growth trajectory for Telangana.
Between 2014-15 and November 2023-24, Telangana’s contribution to India’s nominal GDP increased from 4.1% to 4.9%, reflecting the State’s robust economic policies and effective governance. The Gross State Domestic Product (GSDP) at current prices surged from Rs.5,05,849 crore in 2014-15 to an impressive Rs.14,49,708 crore in 2023-24.
Per Capita Income: A Mark of Prosperity
In those nine and a half years, Telangana outperformed the national average in terms of Per Capita Income (PCI). As of 2023-24, the State’s PCI stands at Rs.3.12 lakh, which is Rs.1.41 lakh higher than the national PCI of Rs.1.71 lakh. This figure more than doubled since 2014-15 when the PCI was Rs.1,24,104. Telangana now leads all Indian States with a PCI of Rs.3,12,398, 1.8 times the national average. The State also recorded the highest average growth rate in PCI among southern States at 12.1 per cent.
Based on the Compound Annual Growth Rate (CAGR) of PCI at current prices from 2014-15 to 2022-23, the average citizen in Telangana can expect their income to double in roughly five to six years, compared to eight to nine years for the average Indian citizen.
Inclusivity in Growth
Telangana’s growth has been inclusive. The NFHS 2019-21 report places the State first in equitable income distribution, along with Tamil Nadu and Kerala, with a Gini coefficient of 0.10. This highlights the State’s success in ensuring that economic benefits are shared fairly among its population.
State Own Tax Revenue (SOTR)
The State’s Own Tax Revenue (SOTR) saw a remarkable increase from Rs.29,288 crore in 2014-15 to Rs.1,12,004 crore in 2022-23, an increase of more than 280 per cent. On average, the SOTR grew at 18.3 per cent annually, significantly higher than the national average of 10.9 per cent. Telangana ranks second in SOTR collection efficiency with 84.2 per cent, just behind Haryana.
Capital Expenditure
Telangana maintained a strong focus on capital expenditure, allocating 26.6 per cent of its budget to it, second only to Andhra Pradesh (40 per cent). This is significantly higher than the average allocation of all States, which stood at 12.7 per cent. The State’s commitment to capital expenditure is evident in its infrastructure development and public investment.
Sectoral Growth: Agriculture, Industry, and Services
The agriculture and allied sectors in Telangana achieved a year-on-year growth in Gross Value Added (GVA) of 11.9 per cent between 2021-22 and 2022-23. This sector employs 45.8 per cent of the state’s population, making its growth crucial for improving living standards. The GSVA for agriculture sector increased from Rs.41,707 crore in 2014-15 to Rs.1,05,135 crore in 2022-23. The industrial sector also saw significant growth, with a 10.5 per cent increase in 2022-23. The GSVA for the industry sector rose from Rs.1,04,366 crore in 2014-15 to Rs.2,35,926 crore in 2022-23.
The services sector, the primary driver of the State’s economic growth, witnessed a remarkable 17.5 per cent growth in its GVA in 2022-23. The GSVA for services sector increased from Rs.2,86,011 crore in 2014-15 to Rs.7,63,358 crore in 2022-23. Telangana’s economic journey since its formation in 2014 was nothing short of extraordinary. With a balanced approach to development, a focus on inclusive growth, and substantial investments in key sectors, the State set a benchmark for others to follow.
The change in fortunes
However, once there was a change of guard in the State, the entire narrative began changing. The Congress, which kept criticising the previous BRS government alleging mounting debts for the State, in fact went a step ahead and so far has already set borrowing records.
The loans taken by the Congress in less than six months have surpassed the budget estimates for the 2023-24 financial year and resulted in the highest borrowing in a single fiscal. Further, the State revenue recorded lowest annual increase in the last five financial years, in an indication of the financial condition of the State in the days ahead.
Against the budget estimation of Rs.38,234 crore, Telangana secured Rs.49,440 crore market borrowings in 2023-24, which is around 129 per cent of the budget estimates. The borrowings were estimated at Rs.36,536 crore when the previous BRS government stepped down in the State in November 2023.
Over the next four months, the new Congress government obtained fresh loans amounting to around Rs.12,905 crore without even implementing any major programmes or initiating new development projects.
Ironically, the Congress decided to rely more on the market borrowings for fulfilling its promises in its budget for the year 2024-25. Of the total Rs.2.75 lakh crore budget, the State government proposed to mobilise a whopping Rs.59,625 crore, over 20 per cent of the financial requirement through open market loans.
The government also proposed to obtain another Rs.5,000 crore through loans from the Central government. During the first quarter of the current financial year of 2024-25 from April to June, the State government submitted an indent to raise Rs.16,000 crore through auction of securities. Despite a significant rise in its revenue receipts, Telangana recorded the lowest annual increase in its revenue with an increase of just Rs.9,740 crore over the previous fiscal.
This is against the increase in revenue by Rs.27,566 crore in 2021-22 and by Rs.31,881 crore in 2022-23. The State missed its annual revenue target by nearly 22 per cent for 2023-24, by earning Rs.1.69 lakh crore, falling short of the Rs.2.16 lakh crore target.