Telangana’s fiscal health prudent with surplus revenue

The financial prudence of the previous BRS government maintained a revenue surplus budget for most financial years, except for three years affected by the COVID-19 pandemic.

Hyderabad: Telangana’s fiscal health has been a topic of intense debate, particularly with the recent claims by the Congress government that it was forced to obtain loans just to pay salaries. However, an analysis of the State’s actual expenditures furnished in the Assembly over the years reveals a different story, pointing out the financial prudence of the previous BRS government which maintained a revenue surplus budget for most financial years, except for three years affected due to COVID-19 pandemic.

For the uninitiated, a revenue surplus budget indicates the sound fiscal health of the State. When a government’s income from taxes and other sources exceeds its revenue expenditures, then it is known as revenue surplus. The salaries and pensions of the State government employees are paid from the revenue expenditure account. The State’s debts do not reflect in this account.

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When Telangana was formed in 2014, the BRS government inherited a challenging financial situation. As per the audited actual budget expenditures, the previous Congress government handed a revenue surplus budget of just Rs 368.65 crore to the BRS (then TRS) government in 2014-15. Over the next few years, this surplus grew significantly, peaking at Rs.4,337 crore in 2018-19. This period of fiscal growth demonstrated the BRS’s commitment to effective financial management and its ability to generate revenue beyond its expenditure.

However, the years 2019-20 to 2021-22 marked a downturn, with the State recording a revenue deficit, reaching as high as Rs 22,298 crore in 2020-21. This was largely due to the economic slowdown triggered by the COVID-19 pandemic, which severely impacted revenue collections while increasing expenditure on health and welfare.

Despite these challenges, the BRS government managed to turn the situation around, with a significant recovery in 2022-23, recording a surplus of Rs 5,943.64 crore. The revised estimates for 2023-24 indicate further improvement, with a projected surplus of Rs 9,031.48 crore in February 2024, though it was later revised down to Rs 1,704.89 crore in July 2024 in the State budget presented by the Congress this fiscal.

The Congress government’s claims that it has been compelled to take loans to pay salaries appear misleading when juxtaposed against this backdrop. While the State did face revenue deficits during the pandemic, the overall trend shows that Telangana has consistently worked towards maintaining a revenue surplus, especially under BRS rule. The Congress’s narrative of financial mismanagement does not hold up when considering the broader fiscal context and the State’s ability to bounce back into a surplus.

Moreover, the budget estimates for 2024-25 project a revenue surplus of Rs 297.42 crores, further underscoring the State’s fiscal discipline. The state’s ability to generate a surplus in recent years, despite the setbacks of the pandemic, points to sound fiscal management. The Congress’s claims of financial distress seem to overlook these facts, painting an incomplete picture of the state’s financial health.