Budget numbers paint a gloomy picture of Telangana's financial health

Telangana CM K Chandrasekhar Rao (KCR) presented the full state Budget for 2019-20 last week. The government has projected gross state domestic product to grow at 10 per cent in nominal terms. This is slower than what was achieved in the previous two years.

KCR has projected a 10 per cent drop in revenues for the current fiscal year (Budget Estimate) and, subsequently, has cut spending by 9 per cent over FY19 (Revised Estimate). 

Income support and power subsidy for farmers, and electricity infra have been given preference. A new crop loan waiver scheme has been announced. Capital expenditure has taken a hit (a 16 per cent drop), putting job creation in peril. Revenue expenditure has taken a 7 per cent hit. 

Though these steps have helped KCR register a revenue surplus, the situation in Telangana suggests many other states could face a similar trouble. While tax revenue in the form of tax devolution from the Centre and GST is growing at only 4 per cent, the real contraction is in grants-in-aid from the Centre, which KCR expects to fall by 70 per cent.