The NITI Aayog has said that the Telangana Government is allotting considerable portion of its resources to debt and interest payments owing to reliance on debt while it termed the State’s strong revenue growth as encouraging.
Payment of debt and interest increased by 73% from ₹12,586 crore in 2018-19 to ₹21,821 crore in 2022-23 consuming a high share of revenue expenditure, the planning body said. NITI Ayog made the comments in its report ‘Fiscal Health Index (FHI) 2025’, providing an assessment of fiscal health of 18 major States, released recently in New Delhi by XVI Finance Commission Chairman Arvind Panagariya.
Referring to fiscal prudence, the report said the State’s fiscal deficit target was set at 5% of the GSDP while it actually recorded a lower deficit of 2.48% in 2022-23. Telangana achieved revenue surplus in 2022-23, after three years of deficits and remained compliant with the Fiscal Responsibility and Budget Management (FRBM) targets for both fiscal and revenue deficits in 2022-23.
The growth rate of outstanding public debt ranged between 11.9% and 19.1% over the past five years and the ratio of outstanding debt to GSDP, which increased year after year until 2020-21, has shown a decreasing trend in the last two years. This year (2022-23), the ratio of outstanding public debt to GSDP decreased to 27.2% when compared to 28.6% of the preceding year.
Health spending as a ratio of total expenditure declined from 4.67% to 4.57%
The report recommended that the State focus more on increasing capital expenditure mainly in the social (health and education) sector services. The State has allocated lower percentage of its total expenditure to health and education compared to other major States. Health spending as a ratio of total expenditure declined from 4.67% in 2018-19 to 4.57% in 2022-23.
The capital expenditure (Capex) decreased in absolute terms as well as in terms of percentage of GSDP. Capex as a share of total expenditure declined from 17.6% in 2018-19 to 9.3% in 2022-23. “Though higher than many major States, it represents a significant decline,” the report said.
