Telangana Deputy CM and Finance Minister Bhatti Vikramarka has presented the vote on account budget 2024-25 for the state of Telangana on February 10. Amongst a lot of expectations from all the sections of society, the Congress Government presented an interim budget instead of a full-fledged budget. When asked about the reason for interim budget, Bhatti said “While we are not happy with presenting the first budget of our government as vote on account, this is being done for the sake of clarity on funds for the State Government from the Centre, which will be clarified in the full budget of the Centre yet to be announced after the ensuing polls”.
Finance Minister has presented a massive Rs. 2,75,890 crore budget for 2024-25 while the revised estimates for 2023-24 are Rs. 2,24,624 crore. (viz. B.E. 2023-24 were Rs. 2,90,296 crore). During the first session of assembly in December 2023, the government has issued a white paper on the debt burden and financial ill health of the state during KCR rule, in which they highlighted the substantial difference between budget estimates and actual expenditure for all 9 years since the state formation in 2014. It became a practice for Telugu states to overestimate the budget and spend very less when compared to even revised estimates. In this budget also, it seems the FM has overestimated the state’s own tax revenue and open market loans as they alone have grown by Rs. 40,000 crore in BE 2024-25 when compared to RE 2023-24.
Telangana Economy: In 2023-24, the Gross State Domestic Product (GSDP) of Telangana showed an increase in current prices from Rs. 13,02,371 crores in 2022-23 to Rs. 14,49,708 crores. However, the economic growth rate exhibited a downward trend, declining from 14.7 per cent to 11.3 per cent during that period. The major reasons for the decline are The Gross Value Added in the crops sub-sector decreased from Rs.49,059 crores in 2022-23 to Rs 45,723 crores in 2023-24. The Per Capita Income is expected to be Rs 3,43,297 in 2023-24, It was Rs 3,09,912 last year but the growth rate is decreased. In summary, both GSDP and PCI have shown less growth during the last year.
Abhayahastam – Promises vs the Budget
Though the Congress party came to power by making 6 guarantees and 66 promises in Manifesto, many of the promises haven’t got any mention in this budget. Especially unemployment allowances of Rs. 4000 per month, Rythu Bharosa of Rs. 15,000 to tenant farmers and Vidya Bharosa of Rs. 5 lakhs financial assistance haven’t got the luck in this budget. While most of the poll promises haven’t received any mention in the budget, the ones mentioned are also allocated insufficient funds. Among the mentioned ones from Abhayahastam guarantees, the promise of Indiramma indlu to 3500 houseless in each constituency would require an amount of Rs. 20,825 crore, while the budget allocation is only Rs. 7740 crore. The major portion of the budget Rs. 53,196 crore is allocated to “Abhayahastam” (6 guarantees) of Congress party. This amount may be insufficient to implement even important promises such as housing for 4 lakh people, Vidya Bharosa to students, Gruhajyothi to provide free power to all households, and Mahalaxmi to provide Rs 2500 to all women.
Table 1: Promised vs the budget allocations.
Since the state formation, KCR government has failed to focus on important sectors and now the Congress is also continuing the same tradition of not focusing on the most important functions of the budget. Income and Employment generation, prioritising welfare activities based on the beneficiaries’ needs, and regulating borrowings are three most important functions of any state’s budget. However, The Congress government has failed in all these functions of the budget. Income-generating areas such as industries (including MSME) and IT sectors got completely neglected in this budget. Allocation of Rs. 2,543 crs for the Industries and Rs.774 crs to Information Technology, both put together is 1.2 per cent of the budget outlay. This allocation also includes budget to MSME sector, which is the most employment generating sector, especially in manufacturing. Employment generation directly depends on capital expenditure, but this budget has only allocated Rs. 24,178 crs which is 8.8 per cent of the budget when compared to 23 per cent in national budget 2024-25. Both these put together is less than 10 per cent of the budget outlay proves the lack of focus on income and employment generation in the state of Telangana.
This lack of focus by previous BRS government has resulted in low contribution of manufacturing sector to GSDP, which is only 15 per cent when compared to 17 per cent at all India level. Imbalance between Economic growth and employment generation has resulted in more unemployment rate (UR) in Telangana, as per recent reports UR at current weekly status during April-June 2023 is 8.8 per cent while all India is 6.7 per cent . Economic growth along with high UR is not sustaining growth and pose real danger to state’s economy.
Cambridge dictionary defines Welfare state as “a system that allows the government of a country to provide social services such as healthcare, unemployment benefit, etc. to people in need”. In Telangana, the allocation of budget to education never crossed 8 per cent while allocation to health is always less than 5 per cent. This squinted approach towards welfare couldn’t result in empowerment of the needy people. The FM allocated Rs. 21,389 crs to the education sector which is 7.7 per cent while states like Bihar allocates 18 per cent to education. Similarly, the allocation of Rs. 11,500 crs to Health which is 4.18 per cent is also not sufficient to implement various health programs such as Ayushman Bharat or Arogya Sri. The Modi government’s approach of “empowering welfare” resulted in the decline of multidimensional poverty among Indians from 29.17 per cent in 2013-14 to 11.28 per cent in 2022-23.
However, a state like Telangana with a metro City like Hyderabad, can really do wonders but both KCR government and Congress government couldn’t focus on the productive arms of the welfare state.
The third function of the budget is to regulate the debt burden on the state. This budget estimates borrowings from the open market as Rs. 59,625 crs which is an increase of whopping 50 per cent over previous year. This government had released a white paper in December’23 on debt burden and financial mismanagement of previous government, which highlights the exaggerated budget estimates vis a vis the less actual expenditure and increased dependency on open market loans to serve highly controversial irrigation projects such as Kaleswaram Lift Irrigation.
However, the Congress government has repeated the same mistakes of exaggerating its own tax income to Rs. 1,38,228 crore (an increase of Rs. 20,000 crore from RE 2023-24) and overestimating open market loans.
In conclusion, the Congress government has made the exact same mistakes what KCR government had done for 10 long years. This budget is also filled with Exaggerated income estimates, irregulated open market loans, less focus on employment-generating sectors, and neglect of empowering welfare such as education and health. As this is an interim budget, I hope the government realises their mistakes and comes up with a full-fledged and visionary budget after the 2024 general elections.
