Telangana Government’s rising expenditure on salaries, pensions and subsidies limits developmental spending: Study

RBI study reveals Telangana's rising expenditure on salaries, pensions, and subsidies limits developmental spending

A study has pointed out Telangana State Government’s rising expenditure for payment of salaries, pensions and subsidies (part of welfare schemes) as they account for a major chunk of budgetary allocations and in turn, leave little space for other developmental spending.

The study, “State Finances: A study of budgets 2025-26” by the Reserve Bank of India (RBI), says the State’s expenditure on account of payment of wages and salaries in different categories is set to cross ₹63,000 crore and reach ₹63,344 crore going by the budget estimates of the current financial year. The amount includes committed expenditure like salaries as well as payments that are being made to different categories of employees like work charged staff, grant-in-aid employees, home guards, daily wage workers and contract/outsourcing workers. The spike in the expenditure over the past decade can be seen from the fact that expenditure on wages and salaries was ₹10,801.4 crore in 2014-15, the year of Telangana’s formation and rose gradually to reach the present levels.

A major jump in expenditure was registered in 2022-23 to 2023-24 when it rose from ₹36,161 crore to ₹60,908 crore, according to the RBI data. The rise can be attributed to the implementation of the fitment benefit of 30% to all categories of employees over and above the quantum recommended by the Pay Revision Commission headed by retired bureaucrat C.R. Biswal.

There has also been significant rise in pension payments which have been exceeding budget estimates since the past few years. In the financial year 2023-24, for instance, the Government allocated ₹13,024 crore for pensions in the budget estimates, but the actual payments were ₹16,841 crore at the end of the fiscal. The same was the case with the current year with pension exceeding the budget estimates of ₹13,109 crore and reaching ₹14,126 crore by December end, according to the provisional data submitted to the Comptroller and Auditor General of India.

Subsidies, a major chunk of which is consumed by the free power to agriculture sector, too have grown manifold. From ₹6,303 crore in 2018-19, the subsidy burden enhanced to ₹21,237 crore as per the revised estimates of 2024-25 and ₹21,347 crore projected in the budget estimates of the current fiscal.