Tax revenue growth decelerates under Congress rule in Telangana, raises fiscal concerns
Officials are expecting to close the year recording tax revenue growth at around 13 per cent. They did not rule out the possibility of the growth confining to single digit when the revised estimates for 2025-26 are presented in the upcoming State Budget for next financial year of 2026-27
Hyderabad: After recording one of the highest growth in the country during the BRS regime, Telangana’s tax revenue has slowed markedly under the Congress government, triggering concerns over weakening revenue mobilisation and widening fiscal stress. The State registered just 11.9 per cent growth of tax revenue upto January this year, over the corresponding period last financial year.
Officials are expecting to close the year recording tax revenue growth at around 13 per cent. They did not rule out the possibility of the growth confining to single digit when the revised estimates for 2025-26 are presented in the upcoming State Budget for next financial year of 2026-27. During the same period, revenue receipts growth was at 11.75 per cent which is likely to reach 12.5 per cent by year-end. Economists have cautioned that these numbers fell short of the high-growth trajectory seen in earlier years.
During the early years of State formation, revenue expansion was robust. In 2015-16, tax revenue growth stood at 52.2 per cent, revenue receipts grew by 49.2 per cent and total receipts by 56.4 per cent. Over the last four financial years, the tax revenue registered an annual growth of 37.6 per cent in 2021-22, 26.36 per cent in 2022-23, and 7.2 per cent in 2023-24.
In contrast, under the current regime in 2024-25, tax revenue growth has dropped to just 2.2 per cent, revenue receipts growth to 2.5 per cent and total receipts growth to 5.8 per cent. The deceleration marks a significant shift from the post-pandemic rebound years.
In absolute terms, tax revenue increased from Rs 1,00,129 crore in 2021-22 to Rs 1,38,582 crore in 2024-25. However, the pace of increase has slowed considerably. Revenue receipts rose from Rs 1,27,469 crore in 2021-22 to Rs 1,73,546 crore in 2024-25, while total receipts climbed from Rs 1,79,295 crore to Rs 2,34,765 crore during the same period. However, the growth momentum has weakened over last two financial years.
Upto January this year, Telangana realised tax revenue of Rs 1,26,293 crore, revenue receipts of Rs 1,38,371 crore and total receipts amounting to Rs 2,07,558 crore.
In another indicator of the poor revenue, the State Owned Tax Revenue (SOTR) of Telangana is pegged at around 84 per cent of its revenue for the current fiscal at the end of January. Telangana was the leading State in India in terms of SOTR during the BRS regime, with 88 per cent of its total revenue coming from its own tax resources.
Between 2014-15 and 2022-23 under the BRS government, the SOTR grew at an average rate of 18.3 per cent, which is significantly higher than the national average of 10.9 per cent. Telangana recorded SOTR growth of over 265 per cent from Rs 29,288 crore in 2014-15 to Rs 1,06,949 crore in 2022-23.
With tax collections from GST share, excise, stamps and registrations forming the backbone of State finances, the slowdown in growth has implications for welfare spending, capital investment and fiscal stability. Financial experts warned that without sustained revenue expansion and better balance between income and expenditure, the State could face mounting fiscal pressure in the coming years.
