Forget surplus… Telangana slips into deficit!

Rosy projections can’t stand the test of ground reality if sound accounting principles are given the go-by intentionally or otherwise. A case in point is the factual fiscal position of the state.

The state government had projected a revenue surplus of Rs 297 crore but ended up with a Rs 9,420-crore revenue deficit in 2024-2025 financial year, going by a recast of figures in the report of the Comptroller and Auditor General of India (CAG). The CAG report also found that Telangana incorrectly budgeted and booked expenditure of Rs 1,865.90 crore under the Capital Section, instead of the Revenue section.

The Finance Accounts -2024-2025 said that the revenue expenditure was Rs 1,77,224 crore and the revenue receipts was Rs 1,67,804 crores. With the increase in expenditure, the state incurred Rs 9,420 crore revenue deficit.

Interestingly, Rs 779-crore revenue surplus was reported in 2023- 2024 financial year.

The reason for the revenue deficit in FY2024-2025 is that the expenditure on salaries has suddenly increased to Rs 30,189 crore from Rs 27,883 crore in a year. The expenditure on subsidies due to the implementation of free power up to 200 units and increased spending on general services and interest payments led to revenue deficit. However, during the 2024-2025 financial year, spending on social service and economic service came down.

As per the official figures, Telangana recorded revenue surplus of Rs 4,337 crore in 2018-2019, Rs 5,943 crore (2022-2023 ) and Rs 779 crore in 2023-2024.

In 2020-2021, the state reported Rs 22,200 crore revenue deficit due to Covid -19 pandemic.

The state then recovered significantly and registered Rs 5,943 crore revenue surplus the next year.

The CAG report said that the during the year 2024-25, the state government incorrectly budgeted and booked expenditure of Rs 1,865.90 crore under Capital Section (Grants-in-Aid, Minor Works and Maintenance of Motor Vehicles and Assistance to Local bodies towards MGNREGA, Swachh Bharat (Gramin), Rashtriya Gram Swaraj Yojana, Krishna and Godavari River Management Boards, etc.) instead of Revenue Section and Rs 109.88 crore under Revenue Section (Purchase of Motor Vehicles, Machinery and Equipment) instead of Capital section as has been determined from the purpose of expenditure.

The accounting agency also pointed to the misclassification of remittance of interest earned from the funds released to single nodal agencies. “The state’s share of interest earned from the funds released in the single nodal account of Single Nodal Agencies (SNA) amounting to Rs 13.51 crore was remitted by project implementing agencies (PIAs) into the Consolidated Fund of State under the Head of Account 0049-04-801-Interest or other earnings from Grantee on unspent balances’ instead of under Minor Head 801 below the concerned functional Major/Sub-Major Heads in the Revenue Receipts section,” it added.