Telangana Emerges Front-Ranking Revenue-Generating State: CAG

Hyderabad: Telangana has emerged as one of the country’s strongest revenue-generating states, with its own tax and non-tax revenues accounting for 79.16 per cent of total revenue receipts, said a CAG report. However, it also showed that the state continues to face significant fiscal pressures.

According to the latest 'State Finances 2024-25' report released by the Comptroller and Auditor General of India (CAG), Telangana was among the 15 states that ended 2024-25 with a revenue deficit, with revenue receipts falling short of revenue expenditure. However, the gap was relatively narrow, with revenue receipts remaining between 90 and 100 per cent of revenue expenditure.

The report highlighted that Telangana remained heavily dependent on short-term borrowings through Ways and Means Advances (WMA), availing such facilities for 363 days during 2024-25, indicating near-continuous reliance on temporary advances from the Reserve Bank of India. Telangana, along with Andhra Pradesh and Rajasthan, accounted for 62 per cent of the total WMA and overdraft availed by states during the year.

Telangana recorded total revenue receipts of `1,67,804 crore during 2024-25. Of this, State Own Tax Revenue (SOTR) stood at `1,09,233 crore, accounting for 65.1 per cent of total revenue receipts, while non-tax revenue contributed `23,608 crore, including `23,455 crore under other non-tax revenues and `153 crore from interest, dividends and profits.

Together, Telangana’s own tax and non-tax revenues accounted for 79.16 per cent of total revenue receipts, placing it among the top states in the country in terms of revenue-raising capacity. Only Haryana recorded a higher share of its own revenues.

The report identified Telangana among the seven states where SOTR constituted more than 60 per cent of revenue receipts. Telangana ranked fourth nationally on this parameter after Haryana, Maharashtra and Karnataka.

A breakdown of Telangana’s own tax revenue showed that state GST was the single largest contributor at `42,443 crore, followed by taxes on sales and trade at `31,816 crore, state excise revenue at `18,604 crore, stamps and registration fees at `8,473 crore, motor vehicle taxes at `6,992 crore and other taxes at `905 crore. These collections together contributed to Telangana’s SOTR of `1,09,233 crore.

The CAG report also highlighted Telangana’s remarkable growth in excise revenue. State excise collections rose from `3,809 crore in 2015-16, the first full financial year after the formation of Telangana, to `18,604 crore in 2024-25, registering a growth of 388 per cent over the decade — the highest growth recorded among all states. Telangana ranked among the top states in excise collections, behind Uttar Pradesh, Karnataka, Maharashtra, Andhra Pradesh and West Bengal.

The report further noted that Telangana generated `31,816 crore through taxes on sales and trade, making it one of the 14 states that collected more than `10,000 crore under this category.

Telangana’s debt burden, loan liabilities and government guarantees have risen sharply over the past decade. The report revealed that Telangana’s outstanding public debt stood at `3,91,881 crore as of March 31, 2025, accounting for 23.88 per cent of the state’s Gross State Domestic Product (GSDP) of `16,40,901 crore. The state falls in the category of states whose debt levels are between 20 and 30 per cent of GSDP.

The CAG noted that Telangana’s outstanding debt has increased more than fourfold over the last decade, rising from `91,985 crore in 2015-16 to `3,91,881 crore in 2024-25. The state also continued to depend on short-term borrowings, with outstanding Ways and Means Advances (WMA) of `5,841.95 crore remaining unpaid at the end of the financial year.

The report highlighted that Telangana has consistently recorded fiscal deficits over the past decade. The fiscal deficit stood at `48,922 crore in 2024-25, while the state posted a revenue deficit of `9,420 crore, reversing the revenue surpluses recorded in some previous years.

One of the most striking findings relates to government guarantees extended to public sector undertakings, special purpose vehicles and other state entities for raising loans. Telangana had outstanding guarantees of `2,41,528 crore as of March 31, 2025, the highest level in its history and more than nine times the `26,000-crore range recorded a decade ago.

The report pointed out that Telangana was the only state where outstanding guarantees exceeded 10 per cent of GSDP, making it an outlier among Indian states. Such guarantees are contingent liabilities that could become a direct burden on the state exchequer if the borrowing entities fail to repay their loans.

The CAG further observed that Telangana witnessed one of the sharpest increases in liabilities among states. Total liabilities of the state increased by 357 per cent during the decade, substantially above the all-state average growth of 190 per cent. Public account liabilities also registered an extraordinary increase of 826 per cent over the period, among the highest in the country.