(Prof. M. A. Malik)
1. Gross Budget Outlay
The total outlay of ₹3.24 lakh crore for 2026–27 marks a significant increase over ₹3.04 lakh crore (2025–26) and ₹2.74 lakh crore (2024–25), reflecting an average annual growth of nearly 9–10% in recent years. In contrast, during the BRS/TRS decade (2014–2024), the budget expanded from about ₹1.00 lakh crore to ₹2.77 lakh crore, implying a higher long-term compounded growth rate of around 11–12%. However, while earlier growth was largely driven by infrastructure (irrigation, Mission Bhagiratha), the current expansion is more welfare-oriented, indicating a shift in fiscal priorities.
2. Revenue Receipts
Revenue receipts are estimated at ₹2.41 lakh crore, up from ₹2.30 lakh crore in 2025–26 and ₹2.24 lakh crore in 2024–25, registering a modest growth of about 5–7% annually. Tax revenue, particularly SGST and state excise, constitute nearly 75–80% of total revenue receipts. During the BRS era, revenue growth often exceeded 10–12% annually, supported by rapid urbanization and real estate expansion in Hyderabad. The present slowdown in revenue growth relative to expenditure suggests emerging fiscal stress, especially if economic growth moderates.
3. Capital Receipts and Borrowings
Capital receipts, largely comprising borrowings, are estimated at approximately ₹80,000–85,000 crore, higher than ₹70,000 crore (2025–26) and ₹65,000 crore (2024–25). This indicates a rising dependence on debt financing. Over the BRS decade, Telangana’s outstanding debt increased from about ₹60,000 crore (2014) to over ₹3.5 lakh crore (2024), yet borrowings were generally aligned with capital formation. In contrast, the current trend raises concerns that a portion of borrowings may be financing revenue expenditure, which is fiscally unsustainable.
4. Revenue Expenditure
Revenue expenditure stands at approximately ₹2.34 lakh crore, accounting for nearly 72% of total expenditure, compared to ₹2.27 lakh crore (2025–26) and ₹2.24 lakh crore (2024–25). Major components include salaries, pensions, interest payments, and subsidies (power, agriculture, welfare schemes). During the BRS regime, revenue expenditure averaged 65–70%, slightly lower than current levels. The rising share indicates increasing committed expenditure, reducing flexibility for developmental spending.
5. Capital Expenditure
Capital expenditure has increased to ₹47,267 crore, up from about ₹36,500 crore (2025–26), reflecting a strong growth of nearly 25–30%. However, its share in total expenditure remains around 14–15%, which is lower than the desirable level of 20%+ for growth-oriented budgets. During peak BRS years (especially 2017–2020), capital expenditure—driven by irrigation projects like Kaleshwaram—reached relatively higher shares. The current increase is positive but still insufficient to significantly enhance long-term productive capacity.
6. Revenue Deficit
The budget indicates a near-zero or marginal revenue deficit, compared to a revenue surplus of about ₹2,700 crore in 2025–26. This marks a shift from earlier fiscal discipline. Over the BRS decade, Telangana maintained revenue surplus in most years, which enabled funding of capital projects without excessive borrowing. The present movement toward deficit suggests that current consumption expenditure is rising faster than revenue generation, posing risks to fiscal sustainability.
7. Fiscal Deficit
The fiscal deficit is estimated at ₹58,458 crore, compared to ₹49,255 crore (2025–26) and around ₹49,000 crore (2024–25), representing about 3.5% of GSDP. While this remains within the FRBM threshold, the upward trend is notable. Telangana’s fiscal deficit during the BRS period was generally maintained around 2.5–3% of GSDP, indicating relatively tighter fiscal control. The current expansion suggests a more aggressive fiscal stance, which could stimulate growth but also increase debt burden.
8. Sectoral Allocations (Economic Balance)
Sectoral allocations show a diversified approach:
– Rural Development & Panchayat Raj: ₹33,688 crore
– Education: ₹26,674 crore (≈8.2% of budget)
– Urban Development (Hyderabad-centric projects): ₹40,000+ crore (multi-year commitments)
While rural infrastructure receives a boost, education spending remains below the recommended 15–20% benchmark. Compared to the BRS era, where irrigation dominated (sometimes over 20% of capital outlay), the current allocation reflects diversification but lacks adequate emphasis on human capital sectors like education and health.
9. Social Sector Allocations
Allocations include:
– BC Welfare: ₹12,511 crore
– SC Welfare: ₹11,784 crore
– ST Welfare: ₹7,937 crore
– Minorities: ₹3,769 crore
These allocations have increased by roughly 8–12% over the previous year, indicating continuity in inclusive policies. However, as a percentage of total expenditure, they remain relatively stable, suggesting incremental rather than transformative expansion. Compared to the BRS period, where flagship schemes like Rythu Bandhu dominated welfare spending, the current approach is broader but more diffused.
10. Six Guarantees (Welfare Commitments)
The financial burden of implementing the six guarantees is estimated to exceed ₹60,000–70,000 crore annually if fully implemented. However, current allocations suggest only partial provisioning, with key schemes either scaled down or phased. For instance, direct income support schemes and housing commitments have not received proportionate allocations. This indicates a gap between political commitments and fiscal feasibility.
11. Economic Impact
The budget’s expansionary stance is expected to support economic growth through increased public expenditure. With capital expenditure rising by nearly 30%, the investment multiplier could boost sectors like construction and infrastructure. However, since over 70% of spending is revenue-oriented, the growth impulse may be largely consumption-driven.
12. Impact on Different Sections of Society
Farmers, rural households, and marginalized communities benefit through subsidies and welfare schemes, which together account for nearly ₹1.4–1.5 lakh crore of total spending. However, the middle class, especially urban taxpayers may indirectly bear the burden through inflation and limited improvements in public services.
13. External Risks and War Situation
Global geopolitical tensions, particularly rising crude oil prices (which can exceed $90–100 per barrel in crisis periods), could significantly impact Telangana’s fiscal position through higher subsidy burdens and inflation.
14. Overall Fiscal Sustainability
Telangana’s outstanding public debt is estimated to exceed ₹4 lakh crore in 2026–27, up from about ₹3.5 lakh crore in 2024–25, indicating a rising debt-GSDP ratio (approaching 25–27%).
15. Conclusion
The Telangana Budget 2026–27 reflects a balance between welfare commitments and developmental needs but rising fiscal pressures and increasing debt dependence require careful management.
(Author is a Professor of Economics, Government Degree College, Chevella, Telangana)