Borrowings surge, grants lag as Telangana’s finances slide deeper into the red

Telangana’s finances show growing stress as borrowings exceed budget estimates while revenues lag. CAG data till November reveals heavy debt dependence, weak tax and non-tax mobilisation, a revenue deficit and shrinking fiscal headroom, raising concerns over long-term sustainability.

Hyderabad: Even as the Congress government projects fiscal discipline and welfare-led growth, Telangana’s own accounts up to November 2025 painted a far grimmer picture. Rising dependence on borrowings, sluggish revenue mobilisation and a growing mismatch between income and expenditure are pushing the State’s finances into increasingly dangerous territory.

Borrowings have already touched 107.52 per cent of the annual budget estimates, sharply higher than 76.84 per cent during the corresponding period last year. Loans now account for nearly 35 per cent of total receipts, pointing to the Congress government’s heavy reliance on debt to keep its finances afloat.

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According to the latest report by the Comptroller and Auditor General (CAG), total receipts stood at Rs 1.66 lakh crore till November, just 58.55 per cent of the budget estimates for 2025-26. Revenue receipts which are the backbone of the State’s fiscal health, have reached only Rs 1.08 lakh crore, or 47.31 per cent of the annual target, remaining largely stagnant compared to last year.

Tax revenue showed only marginal improvement, touching 57.29 per cent of estimates, driven mainly by GST and excise. The State realised about Rs 1 lakh crore in tax revenue against a target of Rs 1.75 lakh crore till November. GST collections crossed 58 per cent, while the State’s share of Union taxes reached 63.55 per cent. Excise revenues improved to 54.82 per cent, aided by revised liquor prices and liquor shop auctions. In contrast, the real estate slowdown persisted, with Stamp and Registration collections stuck at Rs 9,911 crore, barely 52 per cent of the annual target of Rs 19,087 crore.

Capital receipts exceeded projections at 105.41 per cent, driven largely by the borrowings. Net borrowings alone stood at Rs 58,068 crore which is well above the annual estimate of Rs 54,009 crore, in just eight months. This borrowing binge pushing the fiscal deficit to alarming levels at Rs 58,068 crore and far beyond last year’s pace.

Revenue mobilisation outside taxes remained dismal. Land revenue collapsed to just 4.21 per cent of estimates, while non-tax revenue and grants-in-aid together hovered around 15 per cent, highlighting policy drift and limited success in securing Central support.

Putting pressure on the State exchequer, the total expenditure reached Rs 1.54 lakh crore or 58.64 per cent of the annual outlay. Capital expenditure has almost exhausted its annual allocation, touching 99.83 per cent by November compared to last year’s 62.62 per cent during corresponding period. Though projected as an infrastructure push, it is largely debt-funded rather than buoyant revenues.

Worryingly, the State has slipped into a revenue deficit of Rs 9,372.94 crore, reversing earlier surplus claims. Interest payments and pensions have already consumed over 95 per cent of their annual allocations, leaving little fiscal headroom for the remaining months.

Sector-wise data also revealed skewed priorities of the Congress regime. While the General Sector saw over 81 per cent spending, the Social Sector covering health, education and welfare lagged at 42.69 per cent. The Economic Sector registered heavy capital spending, but again backed by debt rather than organic growth.

The numbers sharply contradict the Congress government’s claims of prudent financial management. With borrowings racing ahead of revenues and grants lagging badly, Telangana’s finances appear increasingly debt-driven, raising serious concerns about long-term sustainability.