Poor Central allocations may delay Telangana Budget
Uncertainty over Central allocations in the Union Budget 2026–27 is likely to delay Telangana’s Budget presentation, with officials reassessing revenue projections and expenditure priorities amid the absence of firm funding commitments for major infrastructure and welfare projects
Hyderabad: Uncertainty over Telangana’s share in the Union Budget 2026-27 is likely to push the State government into delaying its own Budget presentation, as finance officials are busy reassessing revenue targets and expenditure priorities in the wake of a disappointing outcome for the State. Though the State Budget presentation was initially hinted to be held in the third week of February, it is now expected to be presented next month.
Beyond a railway corridor announcement, the Union Budget offered no firm allocations for several big-ticket proposals pitched by Telangana, including the Regional Ring Road, Metro Rail Phase-II and the Musi river rejuvenation project. The absence of project-specific commitments has complicated the State’s fiscal planning, which had factored in at least partial Central support for capital-intensive urban and infrastructure works.
With clarity still awaited on grants and scheme-wise transfers, officials are understood to be recalibrating outlay projections. A delay in finalising the State Budget is seen as a possibility to avoid over-committing funds without assured inflows from the Centre.
“We have broad indications on allocations, but the Centre is yet to ascertain firm commitments. Hence, the delay in State Budget preparation,” a senior official in the Finance Department told ‘Telangana Today’.
The department-wise budget preparatory meetings scheduled to commence after Sankranti festival also have been postponed to be held after February 15, due to the ongoing municipal polls.
The Congress government reportedly planned a mammoth Rs 3.25 lakh crore Budget, with heavy reliance on market borrowings and Central funds. However, with no major allocations in the Union Budget, the officials are said to be recalibrating the Budget estimates.
While the State government pegged Central grants at Rs 22,785 crore in 2025-26, Telangana received only Rs 3,800 crore at the end of December. If Central grants remain limited, Telangana may be forced to lean more heavily on market borrowings, potentially crowding out fiscal space for welfare expansion and new capital works.
The situation also constrains Telangana’s borrowing strategy. After the State previously unlocked additional headroom by swapping high-interest loans and short-term loans with long-term loans during the current fiscal, it was permitted enhanced market borrowings. But the fiscal deficit cap of 3 per cent of GSDP under FRBM framework remains a hard limit.
The immediate impact may be felt in the pace of rollout of welfare assurances and large development projects. Schemes requiring upfront capital, including urban infrastructure, irrigation and others could see phased or deferred funding. Even ongoing welfare commitments may require stringent cash-flow management.
Officials are therefore expected to adopt a cautious, staggered approach in the upcoming Budget, prioritising statutory obligations and flagship schemes, while keeping discretionary spending under watch until the full picture of Central devolution and grants becomes clear.
