Telangana: Congress government grapples with deepening fund crisis, puts new schemes on hold

Department heads have reportedly been instructed orally not to clear any bills without prior approval from top officials; tax revenue down to Rs 1.36 lakh crore from a projected Rs 1.64 lakh crore

Hyderabad: Facing a severe financial crunch, the Revanth Reddy government has now put the brakes on new welfare schemes that were promised in its election manifesto. All department heads have reportedly been instructed orally not to clear any bills without prior approval from top officials, indicating that a critical cash-control mechanism was being put in place across the government silently.

Only routine and essential expenses such as salaries, pensions, and day-to-day operations are being cleared. Apart from the much-publicised Indiramma Housing scheme, scheduled for launch next month, no other major manifesto promises will be taken up until further notice. Development works will only be sanctioned on a case-to-case basis and only if deemed urgent.

Revenue reality bites

With poor financial performance since the Congress came to power, Telangana’s economic woes continue to hurt development works and welfare schemes alike. In 2024–25, the State had projected revenue collections of Rs 2.21 lakh crore, but has managed to collect only Rs 1.68 lakh crore, including central tax devolution. The revenue receipts were more than Rs 1,350 crore less than the previous fiscal year of 2023-24.

Tax revenue was down to Rs 1.36 lakh crore from a projected Rs 1.64 lakh crore. The collapse of Hyderabad’s real estate market, weighed down by global recession fears and weak tech hiring in the US, has hit registration and allied revenues the hardest. Making matters worse, the Centre has not released any major funds under Centrally Sponsored Schemes, grants-in-aid, or local body allocations. Except for statutory devolution from GST and central taxes, Telangana has seen little financial support from New Delhi.

Exploring new avenues

With the State’s flagship welfare promises stalled, be it crop loan waivers, increased pensions, or farm labour benefits, the Congress government finds itself under increasing pressure from opposition parties and public alike. With no other cushion, the government had pinned hopes on asset monetisation, particularly land sales. Officials were directed to scout ways to improve revenue including sale of assets and loans against public properties and infrastructure, among others.

“Pending bills will be cleared based on the government’s priorities. We are examining ways to improve revenue and also examine fresh or pending proposals in this regard,” an official in the Finance Department said.

Ironically, the officials confirmed that no austerity measures have been initiated. They said no specific restrictions were imposed on expenditure for extravagant events, use of helicopters for Ministers and other expenses.