Tightrope walk: Will TG govt present a realistic budget today?

Hyderabad: Given the competing demands of various sectors of the state’s economy amidst the precarious financial position, the question that is uppermost in the minds of people as well as economists and policymakers is: Will the Telangana government present a realistic budget for 2026-2027 financial year on Friday?

With the Congress government set to present its 3rd full budget in the Assembly, all eyes are on how the government will balance the revenue receipts and growing expenditures in the outlay, which is likely to be around Rs 3.15 lakh crore to Rs 3.22 lakh crore in the next financial year. The state government has set huge revenue targets every year from 2024-2025, but ended up achieving not more than 75 per cent of the targets in the last two years. As a result, many schemes are not being implemented due to lack of funds. In 2025-2056, the government achieved 72 per cent of the target of tax revenues; only 64 per cent of the tax revenue from the Stamps and Registration Department was achieved. Revenue from sales tax was only 74 per cent, while excise revenue was 69 per cent of the total target till February end.

Officials said that the revenue targets will obviously be increased by at least 15 per cent, though the revenue generation sources remain the same. For the last two years, the state has been relying on borrowings to meet the financial needs in the wake of increasing requirements of funds. The borrowings have already exceeded the targets in the last and the current financial year.

It would be a tightrope walk for the government in the new financial year also as there is little hope to increase revenues in view of the current Iran– US-Israel war and its impact on the services sectors and sales taxes for an indefinite time in the state. Against the backdrop of such tight financial conditions, officials said that the government is again trying to experiment with the launch of a few new welfare schemes by allocating funds.

In April 2025, Chief Minister Revanth Reddy announced the launch of the Rajiv Yuva Vikasam scheme to foster self-employment among five lakh unemployed youth from SC, ST, BC, and Minority communities.

The idea was to provide loans up to Rs 3 lakh, with 60%–80% subsidies, with beneficiaries selected to receive funds by June 2, 2025. The state government had earmarked Rs 6,000 crore for the scheme, but not a single rupee was released. Instead, the entire scheme was put in the cold storage for a year.

This time, the government is likely to reduce capital expenditure and payment of debts and interest on borrowings so that the same funds could be better spent on welfare programmes.