Telangana Congress government struggles to plug revenue deficit

Poor revenue collections and rising debt forcing the State to resort to last-ditch efforts to stay afloat; in last three financial years, Telangana realised average revenue receipts of 77 per cent by March-end

Hyderabad: Reeling under financial mismanagement, the Congress government in Telangana is scrambling to cover up its mounting revenue deficit. Poor revenue collections and rising debt have forced the State to resort to last-ditch efforts to stay afloat.

In the last three financial years, Telangana realised average revenue receipts of 77 per cent by March-end. The State Own Tax Revenue (SOTR) collections stood at an average of 97.26 per cent during the same period. With less than two months left in the fiscal year, shortfalls are evident across multiple sectors even as officials are making frantic efforts to continue to maintain the previous years’ tax collections.

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To boost revenues, the government announced a 25 per cent discount on the Layout Regularisation Scheme (LRS) fee for those paying before March 31. It is aggressively pursuing pending tax collections, including GST, commercial and sales taxes.

Property tax, traffic challans, electricity and water bills, licence fee and other such revenues are being targeted, with a one-time settlement scheme now being considered to clear outstanding dues and generate immediate liquidity.

Further burdening citizens, the Congress regime is looking at excise hikes to extract more revenue from liquor sales. The increase in beer prices alone is expected to bring in an additional Rs 300 crore per month, albeit at the cost of higher consumer spending. Though efforts were being made to collect long-overdue arrears from the Centre, there has been poor response.

Meanwhile, the government has informally instructed finance and other key departments to clear only emergency bills. Though Rs 1,000 crore was allocated for employees’ welfare, medical bills and other needs, only Rs 300 crore is reportedly being spent, with the rest diverted elsewhere.

With these frantic efforts, the Congress government is struggling to bail itself out of the economic mess it has created. The government is yet to announce austerity measures, a standard response in times of economic distress. Ministers continue to use helicopters even for visits to their native districts, raising questions about fiscal prudence.

Earlier Chief Ministers such as N Chandrababu Naidu and YS Rajasekhara Reddy implemented austerity drives in erstwhile Andhra Pradesh. Similarly, former Chief Minister K Chandrashekhar Rao curtailed unnecessary expenditures in his first term post State formation.

Telangana’s financial situation has worsened sharply this year. Revenue receipts stand at Rs 1,23,815 crore — just 55.96 per cent of the Budget estimate of Rs 2,21,242 crore — down from 63.20 per cent in the same period last year.

In contrast, the BRS regime consistently ranked Telangana second in SOTR collections nationwide, achieving a remarkable 102.89 per cent in 2021-22, 100.01 per cent in 2022-23, and 88.88 per cent in 2023-24. It is now doubted whether the current administration will be able to meet the expectations compared to previous years.