Telangana Government Puts Rajiv Yuva Vikasam on Hold

Hyderabad: With the gap between its income and expenditure widening to a staggering Rs 9,000 crore per month, the state government has decided to keep the launch of new welfare schemes like the Rajiv Yuva Vikasam on hold.

The Rajiv Yuva Vikasam scheme aimed to provide self-employment opportunities to unemployed youth by extending financial assistance between Rs 50,000 and Rs 4 lakh. The scheme, which received over 16 lakh applications in April and May, was originally set to launch on June 2, coinciding with Telangana’s formation day.

However, the government has delayed the scheme's rollout, citing the need for further scrutiny of applications. With a requirement of Rs 6,000 crore to cover 5 lakh beneficiaries, the scheme’s immediate future remains uncertain. If it is eventually launched, it is expected to be implemented in phases, beginning with smaller financial assistance of Rs 50,000 to Rs 1 lakh and gradually scaling up to Rs 4 lakh.

The state government's financial position has taken a significant hit this fiscal year 2025-26.

The monthly income of the state in the first two months of the fiscal year (April-May) stood at an average of Rs 16,000 crore, while the expenditure reached Rs 25,000 crore. This resulted in a deficit of Rs 9,000 crore per month, compared to Rs 5,000 crore in the previous fiscal year, when the monthly income stood at Rs 18,500 crore and expenditure at Rs 23,500 crore.

Given these financial pressures, Revanth Reddy and other ministers, during an informal meeting on Monday, reportedly agreed that it would be prudent to delay the launch of new welfare schemes for the time being and instead focus on effectively implementing existing schemes.

The meeting, which was convened to discuss mobilising Rs 9,000 crore for the Kharif season's Rythu Bharosa scheme in the next nine days to cover 70 lakh farmers, reportedly saw deputy chief minister and finance minister Mallu Bhatti Vikramarka providing a detailed overview of the state's fiscal health through a PowerPoint presentation.

Bhatti Vikramarka's presentation reportedly revealed that the state's income was far outpaced by its outgoings, leading to a ballooning revenue deficit. He also flagged the additional burden of the Dearness Allowance (DA) hike for government employees and pensioners, which was announced last week. Set to take effect from July, this DA hike is expected to cost the state Rs 2,400 crore annually or Rs 200 crore per month.

The finance minister further cautioned that another DA hike, promised for six months later, would further strain the state’s finances. Employee unions have been pressing for the clearing of four pending DA payments, threatening strikes if the government fails to address the arrears.

To alleviate the revenue shortfall, the state government is exploring land sales as a potential solution. Last week, an auction of open plots of the Telangana Housing Board in Hyderabad’s KPHB colony fetched Rs 135 crore. More land auctions of the Housing Board are being planned in Parigi (Vikarabad), Gachibowli, Raviryala (Hyderabad) and Warangal, with projections to generate over Rs 500 crore.

The government had expected to raise Rs 35,000 crore from land sales as per the 2025-26 budget. However, no revenue has been realised from land auctions in the first two months (April and May) of the fiscal year.

Recent reports from the Comptroller and Auditor General (CAG) confirm the state’s worsening fiscal situation. Telangana recorded a revenue deficit of Rs 4,023.11 crore in April 2025, a sharp contrast to the revenue surplus of Rs 1,020 crore posted in April 2024. The state's fiscal imbalance in the first month of the 2025-26 fiscal year highlights the growing challenge of balancing welfare commitments with dwindling revenue streams.