Centre’s contribution to Telangana’s revenue receipts declines over the years

The significant drop in the Central contribution, which comprises the State’s share in Central taxes and grants-in-aid, is raising serious concerns about the State’s fiscal autonomy

Hyderabad: The union government’s contribution to Telangana’s revenue receipts has been steadily declining over the past 10 years, from 29.98 per cent as per actual revenue receipts in 2014-15 to just 19.79 per cent in the revised budget estimates for 2023-24.

The significant drop in the Central contribution, which comprises the State’s share in Central taxes and grants-in-aid, is raising serious concerns about the State’s fiscal autonomy.

Telangana’s total revenue receipts grew from Rs 51,041.79 crore in 2014-15 to an estimated Rs 1,69,089.59 crore in 2023-24. However, during the same period, the Centre’s contribution increased at a much slower pace, resulting in its percentage share declining each year, impacting the total revenue receipts.

In 2014-15, the Centre contributed Rs 15,306.59 crore, which accounted for nearly 30 per cent of the State’s revenue. By 2023-24, despite the absolute contribution rising to Rs 33,471.95 crore, its share in the total revenue receipts had fallen to 19.79 per cent.

Over the past decade, the State’s own tax revenue (SOTR) witnessed a significant increase from Rs 29,288.38 crore in 2014-15 to Rs 1,11,798.14 crore in 2023-24. The State’s share in Central taxes has also been slower, increasing from Rs 8,188.5 crore in 2014-15 to Rs 23,742.04 in 2023-24.

However, the more alarming trend is the decrease in grants-in-aid, which are critical for funding state-specific projects and welfare programmes. This decline suggests a shift in the union government’s partisan approach, prioritising other States.

In 2014-15, grants-in-aid stood at Rs 7,118.09 crore, reaching a peak of Rs 15,471.13 crore in 2020-21 during the post-Covid era. However, this figure sharply declined to Rs 9,729.91 crore in 2023-24.

The downward trend raises questions about the sustainability of Telangana’s financial planning and may compel the State to seek alternative revenue sources or increase its borrowings, which would impact its overall fiscal health in the long run.

The officials fear that the decreasing Central support may impact Telangana’s ability to fund its developmental projects and welfare schemes effectively.