Telangana Finance Minister Presents Balanced Budget, Raises Key Fiscal Issues
In a nuanced budget speech delivered in Hyderabad, Finance Minister Bhatti Vikramarka carefully balanced appreciation for central government support with pointed concerns over fiscal disparities affecting Telangana. The minister acknowledged increased funding through centrally-sponsored schemes while simultaneously highlighting what he described as significant imbalances in tax distribution between the state and the Centre.
Tax Devolution Disparity: A Persistent Grievance
Minister Bhatti underscored a long-standing complaint regarding Telangana's financial contributions versus its returns. According to his presentation, Telangana contributes thousands of crores in taxes annually to the national exchequer but receives only 42 paise for every rupee through tax devolution mechanisms. This represents what he termed "serious injustice" to states that effectively control population growth, enhance their own revenue streams, and serve as economic backbones for the nation.
The minister emphasized that this fiscal equation creates substantial challenges for state development initiatives. To address this historical imbalance, the Telangana government presented its case before the 16th Finance Commission, successfully advocating for the inclusion of 'state GSDP' as a critical parameter in the tax devolution formula alongside traditional factors like population and income distance. This strategic intervention resulted in Telangana's share increasing from 2.102 percent to 2.174 percent, marking a modest but significant improvement.
Centrally-Sponsored Schemes: Utilization and Recovery
Regarding centrally-sponsored schemes (CSS), Minister Bhatti provided detailed insights into both historical challenges and current progress. He criticized the previous BRS government for what he described as improper utilization of CSS funds between 2014 and 2023. According to his assessment, even funds specifically sanctioned by the central government were not allocated to their intended schemes but were instead diverted for other purposes, leading to subsequent instalments being halted and causing what he called "irreparable loss" to the state.
"After assuming power, our government identified this critical issue and took decisive action," Bhatti stated. During the current financial year, the administration released nearly ₹3,000 crore specifically to clear pending dues under CSS spanning from 2014-15 to 2023-24. The minister highlighted that funds received under CSS amounted to ₹4,826 crore in 2021-22, with the state securing ₹7,072 crore so far this financial year, demonstrating improved momentum in scheme implementation.
Opposition to New Rural Employment Policy
Minister Bhatti raised substantial concerns regarding recent changes in rural employment policy at the national level. He noted that the central government introduced the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) Bill, commonly referred to as VB-G RAM G, which replaces the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The Telangana legislative assembly unanimously opposed this new legislation, expressing apprehension about its financial implications.
Under the previous MGNREGA framework, the central government provided 90 percent funding for rural employment initiatives, with states contributing the remaining 10 percent. The new VB-G RAM G model reduces central funding to 60 percent, requiring states to bear 40 percent of the financial burden. Minister Bhatti warned that this shift could potentially trigger renewed migration patterns in Telangana as rural employment opportunities become more financially constrained at the state level.
Emphasis on Cooperative Federalism
Throughout his address, Minister Bhatti emphasized the importance of cooperative federalism in driving development outcomes. He affirmed that the Telangana government maintains cordial relations with the central administration while advocating for fairer fiscal arrangements. The minister's balanced approach—acknowledging support where it exists while firmly articulating concerns—reflects a strategic engagement with national policy frameworks.
The budget presentation highlighted several key achievements:
- Successful intervention with the 16th Finance Commission to include state GSDP in devolution formulas
- Clearance of substantial pending CSS dues from previous administrations
- Increased CSS fund utilization in the current financial year
- Unified legislative opposition to policy changes perceived as detrimental to state interests
Minister Bhatti's comprehensive budget address illustrates the complex interplay between state and central governance, where acknowledgment of support coexists with vigorous advocacy for improved fiscal fairness and policy alignment with regional development priorities.
