The Deputy Chief Minister of Telangana, Mr. Bhatti Vikramarka Mallu, presented the Budget for the state for the financial year 2024-25 on July 25, 2024.

Budget Highlights

  • The Gross State Domestic Product (GSDP) of Telangana for 2024-25 (at current prices) is estimated to be about Rs 16.5 lakh crore, an increase of about 12.5% over 2023-24. 

  • Expenditure (excluding debt repayment) in 2024-25 is estimated to be Rs 2,74,058 crore, an increase of 25% over the revised estimates of 2023-24.  In addition, debt of Rs 17,101 crore will be repaid by the state.

  • Receipts (excluding borrowings) for 2024-25 are estimated to be Rs 2,24,802 crore, an increase of 33% as compared to the revised estimate of 2023-24.  

  • Revenue surplus in 2024-25 is estimated to be Rs 297 crore, 83% lower than the revised estimates for 2023-24 (Rs 1,705 crore).  In 2023-24, at the budget stage, the state had estimated a revenue surplus of Rs 4,882 crore.

  • Fiscal deficit for 2024-25 is targeted at Rs 49,255 crore.  In 2023-24, as per the revised estimates, fiscal deficit is expected to be Rs 49,373 crore, 29% higher than the budgeted deficit of 2023-24. 

Policy Highlights

  • Financial Assistance to farm labourers:  A scheme will be launched to provide Rs 12,000 annually to agricultural labourers.   

  • Housing:  Assistance will be offered under the Indiramma Housing Scheme.  Financial assistance of five lakh rupees will be offered for construction.  SC and ST beneficiaries will be given Rs 6,00,000.   Under this scheme, 4.5 lakh houses will be constructed with at least 3,500 houses per assembly constituency. 

  • Women Entrepreneurship:  Under the Indira Mahila Shakthi Programme, 63 lakh women will be trained in different skills to become entrepreneurs.  Rs 1,00,000 crore will be secured for the scheme.

  • Infrastructure:  Five extended corridors of 78 km will be developed under the Hyderabad Metro network. This will entail an outlay of Rs 26,502 crore.  348 kms of state roads will be upgraded in order to be declared as national highways.  A regional ring road will be developed at the cost of Rs 26,502 crore.

  • Farm insurance:  The state will join the Pradhan Mantri Fasal Bima Yojana.  Under the scheme, the state government will pay the premium that is to be paid by the farmer.  

Telangana’s Economy

  • GSDP:  In 2023-24, Telangana’s GSDP (at constant prices) grew at 7.4%, compared to 6.9% in 2022-23.  In comparison, national GDP is estimated to grow at 8.2% in 2023-24.

  • Sectors:  The agriculture sector grew by 0.2% in 2023-24. In comparison, it witnessed 8% growth in 2022-23.  Manufacturing sector grew by 10.1% in 2023-24.  Services grew by 7.7% in 2023-24.  In comparison, it grew by 9.1% in 2022-23.

  • In 2023-24, agriculture, manufacturing, and services sectors are estimated to contribute 17.9%, 16.4%, and 65.7% to the economy, respectively (at current prices).

  • Per capita GSDP:  The per capita GSDP of Telangana in 2023-24 (at current prices) is estimated at Rs 3,83,426, an increase of 12% over 2022-23.

Figure  1 : Growth in GSDP and sectors in Telangana at constant prices (2011-12)

image

Note: Agriculture also includes mining and quarrying; manufacturing also includes construction, and electricity, gas, water, and other utility services.  These numbers are as per constant prices (2011-12) which implies that the growth rate is adjusted for inflation.
Sources: Telangana Economic Survey 2023-24; PRS.

Budget Estimates for 2024-25

  • Total expenditure (excluding debt repayment) in 2024-25 is targeted at Rs 2,74,058 crore.  This is an increase of 25% over the revised estimate of 2023-24.  This expenditure is proposed to be met through receipts (excluding borrowings) of Rs 2,24,802 crore and net borrowings of Rs 45,011 crore.  Total receipts for 2024-25 (other than borrowings) are expected to register an increase of 33% over the revised estimate of 2023-24.

  • Revenue surplus in 2024-25 is estimated to be Rs 297 crore (0.02% of GSDP), lower than the revised estimates for 2023-24 (0.1% of GSDP).  Fiscal deficit for 2024-25 is targeted at Rs 49,255 crore (3% of GSDP), lower than the revised estimates for 2023-24 (3.4% of GSDP).

  • In 2023-24, the revised estimates for revenue surplus are estimated to be lower than the budgeted surplus by Rs 3,177 crore.  This is 65% lower than the surplus budgeted in 2023-24.  This is primarily due to a reduction in revenue receipts, driven by lower grants from the centre. 

Table  1 : Budget 2024-25 - Key figures (in Rs crore)

Items

2022-23 Actuals

2023-24 Budgeted

2023-24 Revised

% change from BE 23-24 to RE 23-24

2024-25 Budgeted

% change from RE 23-24 to BE 24-25

Total Expenditure

2,87,345

2,90,396

2,32,017

-20.1%

2,91,159

25.5%

(-) Repayment of debt

94,810

12,706

13,519

6.4%

17,101

26.5%

Net Expenditure (E)

1,92,536

2,77,690

2,18,498

-21.3%

2,74,058

25.4%

Total Receipts

2,86,863

2,85,773

2,22,602

-22.1%

2,86,915

28.9%

(-) Borrowings

1,26,884

46,318

53,477

15.5%

62,112

16.1%

Net Receipts (R)

1,59,979

2,39,455

1,69,126

-29.4%

2,24,802

32.9%

Fiscal Deficit (E-R)

32,557

38,235

49,373

29.1%

49,255

-0.2%

as % of GSDP

2.5%

2.7%

3.4%

-

3.0%

-

Revenue Surplus

5,944

4,882

1,705

-65.1%

297

-82.6%

as % of GSDP

0.5%

0.3%

0.1%

-

0.0%

-

Primary Deficit

10,735

15,827

26,035

64.5%

31,526

21.1%

as % of GSDP

0.8%

1.1%

1.8%

-

1.9%

-

GSDP*

13,08,034

14,16,111

14,63,960

3.4%

16,47,324

12.5%

Note: BE is Budget Estimates; RE is Revised Estimates.
*GSDP figures for 2024-25 used in the analysis have been back-calculated using consolidated debt figures in the Budget at a Glance document.
Sources: Annual Financial Statement, Telangana Budget 2024-25; PRS.

Expenditure in 2024-25

  • Revenue expenditure for 2024-25 is proposed to be Rs 2,20,945 crore, an increase of 32% over the revised estimate of 2023-24.  This includes the expenditure on salaries, pensions, interest, grants, and subsidies.  Budgeted increase in revenue expenditure is due to higher allocation towards: housing (by 1,781%), urban development (217%), welfare of SC, ST, OBC and Minorities (95%), in 2024-25.  

  • Capital outlay for 2024-25 is proposed to be Rs 33,487 crore, a reduction of 24% over the revised estimate of 2023-24.  Capital outlay indicates the expenditure towards creation of assets. This reduction is due to reduced capital outlay towards water supply and sanitation (by 78%), and urban development (100%).

  • In 2024-25, loans and advances by the state are expected to be Rs 19,626 crore, higher than the revised estimates by 186%.     This is primarily due to an increase in allocation towards loans for water and sanitation and major irrigation projects.

Unspent Provisions

Previous State Finance Audit Reports have highlighted the under-utilisation of provisions under the grants for Housing and loans for Irrigation projects.  From 2017-22, utilisation of grants under Weaker Section Housing Programme has been less than 50%, indicating that these grants were less prioritised. [1]  

Additionally, under-budgeting of grants for Social and Tribal Welfare has been a persistent trend, as highlighted by the CAG report.  In the last 5 years, schemes for tribal welfare and social welfare have seen considerable underspending.  In 2023-24, revised estimates for revenue expenditure under Welfare of SC, ST, OBC and Minorities head, saw a reduction of Rs 22,694 crore, compared to budget estimates.

[1]  State Finances Audit Report for the year ended 31 March, 2022, CAG

Table  2 :  Expenditure budget 2024-25 (in Rs crore)

Items

2022-23 Actuals

2023-24 Budgeted

2023-24 Revised

% change from BE 23-24 to RE 23-24

2024-25 Budgeted

% change from RE 23-24 to BE 24-25

Revenue Expenditure

1,53,407

2,11,685

1,67,385

-21%

2,20,945

32%

Capital Outlay

17,881

37,525

44,253

18%

33,487

-24%

Loans given by the state

21,248

28,480

6,861

-76%

19,626

186%

Net Expenditure

1,92,536

2,77,690

2,18,498

-21%

2,74,058

25%

Sources:  Annual Financial Statement, Telangana Budget 2024-25; PRS.

Committed expenditure: Committed expenditure of a state typically includes expenditure on payment of salaries, pensions, and interest. A larger proportion of budget allocated for committed expenditure limits the state’s capacity to spend on other expenditure priorities such as capital outlay.  In 2024-25, Telangana is estimated to spend Rs 29,731 crore on pension and interest payments, which is 13% of its estimated revenue receipts.  Estimates for allocation towards salaries are not available for 2024-25.  In 2022-23, 24% of revenue receipts were spent towards pension, salary, and interest payments. 

Table  3 : Committed Expenditure in 2024-25 (in Rs crore)

Committed Expenditure

2022-23 Actuals

2023-24 Budgeted

2023-24 Revised

% change from BE 23-24 to RE 23-24

2024-25 Budgeted

% change from RE 23-24 to BE 24-25

Pension

15,816

13,024

16,841

29%

11,641

-31%

Interest payment

21,821

22,408

23,337

4%

17,730

-24%

Salary

36,157

-

39,990

-

-

-

Total Committed Expenditure

37,637

35,432

40,179

13%

29,371

-27%

Note: Budgeted Estimates for salary are not available for 2024-25.
Sources: Annual Financial Statement, Telangana Budget 2024-25; PRS.

Sector-wise expenditure: The sectors listed below account for 78% of the total expenditure on sectors by the state in 2024-25.  A comparison of Telangana’s expenditure on key sectors with that by other states is shown in Annexure 1.

Table  4 : Sector-wise expenditure under Telangana Budget 2024-25 (in Rs crore)

Sector

2022-23 Actuals

2023-24 Budgeted

2023-24 Revised

2024-25 Budgeted

% change from RE 23-24 to BE 24-25

Budget Provisions 
 2024-25

Agriculture and Allied Activities

18,825

29,164

29,834

51,463

73%

Rs 15,470 crore has been allocated for debt relief for farmers. 

Welfare of SC, ST, OBC, and Minorities

11,783

33,075

10,381

23,026

122%

Rs 2,000 crore has been allocated to the CM Dalit Empowerment Programme.

Social Welfare and Nutrition

14,837

19,416

16,229

22,085

36%

Rs 7,376 crore has been allocated to Aasara pensions. 

Education, Sports, Arts, and Culture

17,728

18,955

19,426

21,801

12%

Rs 11,547 crore has been allocated for assistance to local bodies for primary and secondary education. 

Energy

17,679

12,125

15,945

16,254

2%

Rs 1,825 crore has been allocated to the Gruha Jyoti scheme. 

Irrigation and Flood Control

8,581

11,169

27,566

12,408

-55%

Rs 1,676 crore has been allocated to the Kaleshwaram Project. 

Health and Family Welfare

8,330

12,378

9,441

11,800

25%

Rs 696 crore has been allocated to the Aarogyasri Healthcare Trust. 

Urban Development

4,285

6,999

4,093

10,670

161%

Rs 1,500 crore has been allocated to the Musi Riverfront Development. 

Rural Development

7,985

8,947

7,241

10,245

41%

Rs 1,773 crore has been allocated to the MGNREGS. 

Police

8,427

9,023

9,303

8,972

-4%

Rs 4,228 crore has been allocated to district police. 

Transport

3,061

10,060

3,967

8,911

125%

Rs 3,083 crore has been allocated for the Mahalakshmi scheme.  

% of total expenditure on all sectors

71%

69%

72%

78%

 

 

Sources: Annual Financial Statement, Telangana Budget 2024-25; PRS.

Receipts in 2024-25

Inter-state settlement

Inter-state settlement refers to the sums owed by one state government to another following the establishment of a new state.  According to BE 2023-24, Telangana was expected to receive Rs 17,828 crore as inter-state settlement.  But according to RE 2023-24 estimates, no funds have yet been received under this head. 

  • Total revenue receipts for 2024-25 are estimated to be Rs 2,21,242 crore, an increase of 31% over the revised estimate of 2023-24.  Of this, Rs 1,73,390 crore (78%) will be raised by the state through its own resources, and Rs 47,853 crore (22%) will come from the centre.  Resources from the centre will be in the form of state’s share in central taxes (12% of revenue receipts) and grants (10% of revenue receipts).

  • Devolution:  In 2024-25, state’s share in central taxes is estimated at Rs 26,216 crore, an increase of 10% over the revised estimate of 2023-24.

  • Grants from the centre in 2024-25 are estimated at Rs 21,636 crore, an increase of 122% over the revised estimates for 2023-24.  In 2023-24, as compared to the budget estimates, grants from centre are estimated to register a shortfall of Rs 31,529 crore.

  • State’s own tax revenue:  Telangana’s total own tax revenue is estimated to be Rs 1,38,181 crore in 2024-25, an increase of 24% over the revised estimate of 2023-24. 

Table  5 : Break-up of the state government’s receipts (in Rs crore)

Items

2022-23 Actuals

2023-24 Budgeted

2023-24 Revised

% change from BE 2023-24 to RE 2023-24

2024-25 Budgeted

% change from RE 2023-24 to BE 2024-25

State's Own Tax

1,06,949

1,31,029

1,11,798

-15%

1,38,181

24%

State's Own Non-Tax

19,554

22,808

23,820

4%

35,208

48%

Share in Central Taxes

19,668

21,471

23,742

11%

26,216

10%

Grants-in-aid from Centre

13,179

41,259

9,730

-76%

21,636

122%

Revenue Receipts

1,59,350

2,16,567

1,69,090

-22%

2,21,242

31%

Non-debt Capital Receipts

629

22,888

36

-100%

3,560

9798%

Net Receipts

1,59,979

2,39,455

1,69,126

-29.4%

2,24,802

33%

BE is Budget Estimates; RE is Revised Estimates. 
Sources: Annual Financial Statement, Telangana Budget 2024-25; PRS.

Recovery of loans 

As highlighted by the State Finances Audit Report by CAG, over the last few years, the levels of recovery of loans have been consistently low.  The budget estimates are inflated in comparison to previous years’ trends.

A major share of loans advanced are towards irrigation projects.  The State Finances Audit Report has highlighted the non-completion of irrigation projects in Telangana, with delays in completion ranging from 3-11 years.  This has led to extra burden on the state regarding servicing of debt and interest liabilities.

  • In 2024-25, State GST is estimated to be the largest source of own tax revenue (37% share).  State GST revenue is estimated to increase by 29% over the revised estimates of 2023-24.

  • Revenue from Sales Tax/VAT and State Excise is expected to contribute 24% and 19% to own tax revenue respectively.

Table  6 :  Major sources of state’s own-tax revenue (in Rs crore)

Head

2022-23 Actuals

2023-24 Budgeted

2023-24 Revised

% change from BE 23-24 to RE 23-24

2024-25 Budgeted

% change from RE 23-24 to BE 24-25

State GST

36,248

44,000

39,295

-11%

50,763

29%

Sales Tax/ VAT

29,604

39,500

29,990

-24%

33,449

12%

State Excise

18,470

19,885

20,299

2%

25,618

26%

Stamps Duty and Registration Fees

14,228

18,500

14,296

-23%

18,229

28%

Taxes on Vehicles

6,737

7,512

7,095

-6%

8,478

19%

Taxes and Duties on Electricity

886

751

17

-98%

716

4081%

Land Revenue

0

12

0

-97%

11

3110%

Sources: Annual Financial Statement, Revenue Budget, and Telangana Budget 2024-25; PRS

Deficits, Debt, and FRBM Targets for 2024-25

The Telangana Fiscal Responsibility and Budget Management Act, 2005 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit and fiscal deficit of the state government.

Revenue deficit/surplus:  It is the difference of revenue expenditure and revenue receipts.   A revenue deficit implies that the government needs to borrow to finance those expenses which do not increase its assets or reduces its liabilities.  The budget estimates a revenue surplus of Rs 297 crore in 2024-25.

Fiscal deficit:  It is the excess of total expenditure over total receipts.  This gap is filled by borrowings by the government and leads to an increase in total liabilities.  In 2024-25, the fiscal deficit is estimated to be Rs 49,255 crore.  For 2024-25, the central government has permitted fiscal deficit of up to 3.5% of GSDP to states, of which 0.5% of GSDP will be available only upon carrying out certain power sector reforms.  As per the revised estimates, in 2023-24, the fiscal deficit of the state is expected to be 3.4% of GSDP. 

Outstanding liabilities:  Outstanding liabilities is the accumulation of total borrowings at the end of a financial year, it also includes any liabilities on public account. In 2024-25, the outstanding liabilities are estimated to be 27.38% of GSDP, similar to the revised estimate for 2023-24 (27.45% of GSDP).

Figure  2 : Revenue and Fiscal Balance (% of GSDP) 

image  Note: * RE is Revised Estimates; BE is budget estimates.
Sources: Medium Term Fiscal Policy, Telangana Budget 2024-25; PRS.  

Figure  3 : Outstanding Liabilities (as % of GSDP) image

Note: *RE is Revised Estimates.
Sources: Medium Term Fiscal Policy, Telangana Budget 2024-25; PRS.

 

Annexure 1:  Comparison of states’ expenditure on key sectors

The graphs below compare Telangana’s expenditure in 2024-25 on six key sectors as a proportion of its total expenditure on all sectors.  The average for a sector indicates the average expenditure in that sector by 31 states (including Telangana) as per their budget estimates of 2023-24. [2]

  • Education: Telangana has allocated 8.6% of its expenditure on education in 2024-25.  This is lower than the average allocation for education by states in 2023-24 (14.7%).

  • Health:  Telangana has allocated 4.6% of its total expenditure towards health, which is lower than the average allocation for health by states (6.2%).

  • Agriculture:  Telangana has allocated 20.2% of its total expenditure towards agriculture, which is higher than the average expenditure on agriculture by states (5.9%).

  • Rural development:  Telangana has allocated 4% of its expenditure on rural development.  This is lower than the average allocation for rural development by states (5%).

  • Urban development:  Telangana has allocated 4.2% of its expenditure towards urban development.   This is higher than the average allocation towards urban development by states (3.4%).

  • Energy:  Telangana has allocated 6.4% of its total expenditure towards energy, which is higher than the average allocation by states (4.7%).

image

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Note: 2022-23, 2023-24 (BE), 2023-24 (RE), and 2024-25 (BE) figures are for Telangana.

[2]  The 31 states include the Union Territories of Delhi, Jammu and Kashmir, and Puducherry.

Sources: Annual Financial Statement, Telangana Budget 2024-25; various state budgets; PRS.

Annexure 2:  Comparison of 2022-23 Budget Estimates and Actuals

The following tables compare the actuals of 2022-23 with budget estimates for that year.

Table  7 : Overview of Receipts and Expenditure (in Rs crore)

Particular

2022-23 BE

2022-23 Actuals

% change from BE to Actuals

Net Receipts (1+2)

1,93,089

1,59,979

-17%

1. Revenue Receipts (a+b+c+d)

1,93,029

1,59,350

-17%

a. Own Tax Revenue

1,08,212

1,06,949

-1%

b. Own Non-Tax Revenue

25,422

19,554

-23%

c. Share in central taxes

18,394

19,668

7%

d. Grants-in-aid from the Centre

41,002

13,179

-68%

     Of which GST compensation grants

3,000

0

-100%

2. Non-Debt Capital Receipts

60

629

948%

3. Borrowings

59,672

1,26,884

113%

      Of which GST compensation loan

0

0

0

Net Expenditure (4+5+6)

2,45,257

1,92,536

-21%

4. Revenue Expenditure

1,89,275

1,53,407

-19%

5. Capital Outlay

29,728

17,881

-40%

6. Loans and Advances

26,253

21,248

-19%

7. Debt Repayment

11,702

94,810

710%

Revenue Balance

3,755

5,944

58%

Revenue Balance (as % of GSDP)

0.3%

0.5%

61%

Fiscal Deficit

52,167

32,557

-38%

Fiscal Deficit (as % of GSDP)

3.9%

2.5%

-37%

Source: Telangana Budget Documents of various years; PRS.

Table  8 : Key Components of State's Own Tax Revenue

Tax Head

2022-23 BE

2022-23 Actuals

% change from BE to Actuals

State GST

36,203

36,248

0%

Sales Tax/ VAT

33,000

29,604

-10%

State Excise

17,500

18,470

6%

Stamps Duty and Registration Fees

15,600

14,228

-9%

Taxes on Vehicles

4,953

6,737

36%

Taxes and Duties on Electricity

32

886

2708%

Land Revenue

7

0

-96%

Source: Telangana Budget Documents of various years; PRS.

Table  9 : Allocation towards Key Sectors

Sector

2022-23 BE

2022-23 Actuals

% change from BE to Actuals

Housing

12,172

314

-97%

Roads and Bridges

7,089

2,401

-66%

Welfare of SC, ST, OBC, and Minorities

31,427

11,783

-63%

Transport

8,016

3,061

-62%

Urban Development

6,672

4,285

-36%

Water Supply and Sanitation

3,448

2,222

-36%

Agriculture and Allied Activities

27,228

18,825

-31%

Health and Family Welfare

10,954

8,330

-24%

Social Welfare and Nutrition

18,602

14,837

-20%

Irrigation and Flood Control

9,444

8,581

-9%

Rural Development

8,557

7,985

-7%

Police

8,764

8,427

-4%

Education, Sports, Arts, and Culture

16,043

17,728

11%

Energy

10,625

17,679

66%

Source: Telangana Budget Documents of various years; PRS.

 

 

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