Telangana faces costly year as El Niño preparedness lags

Telangana faces potential economic pressure from El Niño, with high inflation, unemployment and risks to agriculture. The government has ordered a contingency plan, but concerns remain over water availability, crop choices, household costs and whether preparations will translate into timely action.

Hyderabad: Gear up for a rough year ahead. Telangana faces the prospect of an El Niño-driven economic squeeze, with high inflation, mounting employment pressures and the risk of farm distress. Households remain vulnerable to another prolonged spell of rising living costs.

Despite the Centre flagging the weather threat nearly six months ago, the Congress government in Telangana began preparing its contingency plan only in July. The government has now ordered a broader action plan, but officials are doubtful whether it can adequately protect people from the emerging risks.

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The warning signs are already visible in inflation data. Telangana recorded retail inflation of 6.27 per cent in August, the highest among States, against the national average of 4.82 per cent. Rural inflation stood at 6.79 per cent, compared with 5.23 per cent nationally, while urban inflation was 5.88 per cent, against 4.31 per cent. Although the State’s rate eased marginally from 6.36 per cent in June, it remained substantially above the national average. Food prices and transport costs have been key drivers.

The pressure could intensify if rainfall remains deficient. The Reserve Bank of India’s household survey indicated that consumers expect inflation to reach 10 per cent over the next year. The RBI has also raised the repo rate by 0.25 percentage point to 5.5 per cent, signalling a shift towards calibrated tightening. Costlier borrowing could increase loan repayments and restrain spending, adding to the strain on families and small businesses.

Employment offers little comfort. Telangana’s unemployment rate stood at 5.7 per cent in August, above the national rate of 5 per cent. Youth unemployment was 19.3 per cent, rising to 24.9 per cent among women aged 15–29. The State’s higher labour force participation rate of 58.2 per cent, against 54.6 per cent nationally, indicates greater participation in the job market but does not guarantee adequate employment.

Annual data also point to a worsening trend during the final years of the previous BRS regime. Telangana’s unemployment rate among those aged 15–59 rose from 4.6 per cent in 2022–23 to 5.1 per cent in 2023–24, while the national rate increased from 3.4 per cent to 3.5 per cent. These annual estimates use a different methodology from the latest monthly figures and are not directly comparable.

On October 11, Chief Minister A Revanth Reddy directed officials to prepare an action plan covering drinking water, irrigation, agriculture and electricity through June next year. However, Agriculture Minister Tummala Nageswara Rao advised farmers against taking up paddy cultivation during the Yasangi season, while Revenue Minister Ponguleti Srinivasa Reddy also advised farmers against Yasangi cultivation amid concerns over water availability.

A weak monsoon could hit crop yields and farm incomes, depress rural demand and intensify shortages of water and fodder. The impact would extend beyond agriculture, raising costs for dairy and poultry producers and eventually pushing up food prices. For households already grappling with expensive essentials, another round of price hikes could leave little room for discretionary spending.

The Chief Minister himself asked officials to treat the crisis like the COVID-19 pandemic and work towards effective implementation of the action plan. Though these steps acknowledge the threat, officials are doubtful whether planning will translate into timely, district-level action.

“Despite repeated appeals, farmers cultivated paddy on over 52 lakh acres during the Vaanakalam season. We doubt if farmers will follow the government’s instructions and refrain from cultivating water-intensive crops. Further, the government is also tight on its budget,” a senior Agriculture Department official said.

A COVID-like economic shock is not inevitable. But the combination of rainfall uncertainty, high inflation, youth unemployment and tighter credit leaves Telangana vulnerable. The government’s test will be whether it can protect farmers, workers and households before the strain develops into a wider economic crisis.

• Telangana recorded the highest retail inflation rate in India at 6.27 per cent in August 2026.
• National average inflation rate is 4.82 per cent.
• Primary Driver: High food prices and rising transport/fuel costs continued to drive price pressures.
• Telangana’s unemployment rate stands at 5.7 per cent, which is higher than the all-India average of 5 per cent in August 2026.
• Youth unemployment (ages 15–29) in Telangana is 19.3 per cent, more than three times the State’s overall unemployment rate.

Top Five States with the Highest Retail Inflation (August 2026)

1. Telangana: 6.27 per cent

2. Tamil Nadu: 5.92 per cent

3. Madhya Pradesh: 5.55 per cent

4. Andhra Pradesh: 5.53 per cent

5. Odisha: 5.52 per cent

Top States with Highest Unemployment Rates (August 2026)

1. Goa: 8.3 per cent

2. Himachal Pradesh: 8.1 per cent

3. Nagaland: 7.1 per cent

4. Arunachal Pradesh: 6.8 per cent

5. Kerala: 6 per cent

6. Andhra Pradesh: 7.4 per cent

7. Uttar Pradesh: 5.9 per cent

8. Telangana: 5.7 per cent

9. Rajasthan: 7.5 per cent

10. Delhi: 4 per cent