RBI Study of State budgets disproves Congress claims on Telangana’s fiscal condition

Under the BRS government, Telangana achieved a remarkable 15.9% Compound Annual Growth Rate (CAGR) in development expenditure, surpassing the national average by 5.81%

Hyderabad: Telangana’s fiscal condition became one of the most debated issues recently, amid the Congress government’s repeated claims that the BRS left the State in tatters. The Congress also expressed its inability to take up any major development programmes, allegedly because as most of the funds were being spent to “repay the debts” under the BRS regime.

However, notwithstanding political mudslinging, data proves that Telangana, under the BRS government, was a top performer in fiscal prudence and development expenditure. The Study of State budgets released by Reserve Bank of India (RBI) from 2014-15 to 2021-22 shows Telangana leading the nation in Compound Annual Growth Rate (CAGR) for development expenditure, recording an impressive 15.9 per cent, which is 5.81 per cent higher than the national average.

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After Telangana, Arunachal Pradesh posted a CAGR of 13.75 per cent, with Assam and Karnataka posting 11.96 per cent and 11.56 per cent respectively. Andhra Pradesh ranked lowest, registering a CAGR of development with just 2.84 per cent.

Telangana had topped the charts for two consecutive years in terms of the percentage of the State budget spent for development purposes. According to recent RBI reports, the State spent 77.4 per cent of its total budget to development in 2022-23 and 76.3 per cent in 2021-22. In 2020-21, Telangana spent 69.7 per cent on development, ranking third nationally, after Delhi and Arunachal Pradesh.

In absolute terms, Telangana was ranked fifth in development expenditure, spending Rs.1.98 lakh crore out of a total Rs 2.56 lakh crore in 2022-23. The States ahead of Telangana – Uttar Pradesh, Maharashtra, Tamil Nadu, and Rajasthan – are much larger in population and geographic area.

Despite fiscal constraints imposed by the Centre during the period, Telangana’s impressive performance was attributed to its strong growth in State’s Own Tax Revenue (SOTR). Telangana’s SOTR grew by 18.3 per cent annually from Rs.29,288 crore in 2014-15 to Rs.1,12,004 crore in 2022-23, marking an increase of over 280 per cent. The State ranked second in SOTR collection efficiency, with 84.2 per cent, just behind Haryana.

What is development expenditure:

This refers to government spending aimed at boosting social and economic growth, including infrastructure projects such as roads, hospitals, schools, airports, and other long-term investments in key sectors like agriculture, health, and education.