Central funds dip, own revenue rises: Telangana’s 10-year story

There is a reduction in the share of Telangana in the central tax pool.

Hyderabad: The financial support to Telangana from the Centre has been declining steadily over the last 10 years.

According to a study by the Centre for Economic and Social Studies (CESS), central non-debt transfers now account for 15.1 per cent of the total revenue receipts of the state.

In 2015-16, the share stood at 23.5 per cent but declined to 15.1 per cent by 2024-25.

The findings were published in a report titled ‘Public Finances of Telangana: Trends, Challenges and Policy Priorities’. The report reviews the state’s financial performance since its formation in 2014.

Telangana gets a smaller share of central taxes

As per the report, there is also a reduction in the share of Telangana in the central tax pool. Its allocation under the divisible pool of Union taxes decreased from 2.4 per cent during the 14th Finance Commission period to 2.1 per cent under the 15th Finance Commission.

CESS found that Telangana faces a disadvantage due to the criteria used to distribute central tax revenue.

Some of the factors that are against Telangana are the assessment of per capita income distance and the weight given to total fertility rate (TFR).

GST compensation withdrawal adds to financial pressure

Telangana’s finances are also affected by the end of GST compensation. It resulted in a sharp decline in grants-in-aid from the Centre.

However, despite the fall in financial transfers from the Centre, Telangana has continued to generate most of its revenue through its own resources.

CESS found that the state’s own revenue contributed 76 per cent of its cumulative revenue receipts during the 10-year period.

The state’s own tax revenue increased at an annual growth rate of 11.6 per cent. It reached Rs 1,09,233 crore in 2024-25.