1 week Ago By DC Correspondent
Hyderabad: Telangana has secured the eighth position among all states in Niti Aayog's inaugural Fiscal Health Index (FHI) 2025, released on Friday. The report evaluated the fiscal health of 18 states based on their contributions to GDP, public expenditure, revenues, and fiscal stability. The report, unveiled by Arvind Panagariya, chairman of the 16th Finance Commission, placed Telangana in the “front runner” category with an FHI score of 43.
6. Odisha topped the rankings with 67.8.
Telangana excelled in revenue mobilisation, ranking second, while securing ninth place in both fiscal prudence and debt index. Telangana demonstrated strong revenue mobilisation, thanks to effective tax collection systems and resource mobilisation efforts. The report highlighted that despite a lower outstanding liabilities-to-GSDP ratio than states like Karnataka, Telangana's superior revenue performance significantly contributed to its FHI score.
The state recorded a robust growth in its own tax revenue, which increased by 65.3 per cent between 2018-19 and 2022-23. With a buoyancy ratio of 1.
65 relative to GSDP, Telangana's revenue growth outpaced its economic expansion. In FY23, own tax revenue accounted for 67 per cent of total receipts, driven by state GST, taxes on sales and trade, excise, and stamps and registration. While Telangana's developmental expenditure remained strong —accounting for 70 per cent of total expenditure — its allocation to capital expenditure (capex) and social sectors like health and education has seen a decline.
Capex as a share of total expenditure dropped from 17.6 per cent in 2018-19 to 9.3 per cent in 2022-23, despite remaining higher than many other states.
Similarly, health expenditure declined from 4.67 per cent to 4.57 per cent of total expenditure during the same period.
The report emphasised the need for Telangana to prioritise capital investments in social sectors to sustain inclusive growth. Telangana maintained fiscal discipline with a fiscal deficit of 2.48 per cent of GSDP in 2022-23, well below the target of 5 per cent, achieving a revenue surplus after three years of deficits.
Debt-to-GSDP ratio declined from 28.6 per cent in 2021-22 to 27.2 per cent in 2022-23, and the average interest rate on public debt reduced from 8.
2 per cent in 2018-19 to 7.6 per cent in 2022-23. However, the state’s debt servicing burden grew, with interest payments increasing by 73 per cent over five years.
The report suggested that Telangana leverage its strong revenue performance to increase investments in health, education, and other social sectors. It also recommended a balanced approach to capital expenditure, ensuring sustainable growth while maintaining fiscal stability..
