Telangana Emerges as Top Revenue-Generating State Amid Fiscal Challenges: CAG Report
A recent CAG report ranks Telangana among India's leading revenue-generating states, with own tax revenues accounting for nearly 80% of receipts. However, the report also warns of significant fiscal pressures, including a revenue deficit and rising public debt levels.
Highlights
- •Telangana's own tax and non-tax revenues account for 79.16% of its total revenue receipts.
- •The state recorded total revenue receipts of ₹1,67,804 crore during the 2024-25 fiscal year.
- •Outstanding public debt reached ₹3,91,881 crore, representing 23.88% of the state's GSDP.
- •Outstanding government guarantees hit a record high of ₹2,41,528 crore, exceeding 10% of GSDP.
The state of Telangana has officially been recognized as a front-ranking revenue-generating state within India, according to the latest fiscal analysis provided by the Comptroller and Auditor General of India (CAG). Despite this strong performance in collecting internal revenue, the assessment underscores the persistent fiscal challenges the state faces, as it continues to navigate a demanding financial landscape.
Analysis of Revenue Streams and Fiscal Health
The detailed 'State Finances 2024-25' report reveals that Telangana relies heavily on its own resources, with tax and non-tax revenues contributing 79.16 per cent of its total revenue receipts. This impressive metric places the state among the top performers nationwide. Specifically, the State Own Tax Revenue (SOTR) reached ₹1,09,233 crore, representing 65.1 per cent of total receipts, while non-tax revenue added another ₹23,608 crore. Notably, GST emerged as the leading contributor to tax collections, followed by sales and trade taxes, and excise duties.
Despite these robust inflows, the CAG report notes that Telangana is among 15 states that concluded the 2024-25 fiscal year with a revenue deficit. The state has also shown a marked dependency on short-term financial instruments. It utilized Ways and Means Advances (WMA) for 363 days during the year, highlighting a consistent need for temporary liquidity support from the Reserve Bank of India.
Debt Sustainability and Future Risks
Financial liabilities in Telangana have witnessed a sharp upward trajectory over the past ten years. Total outstanding public debt reached ₹3,91,881 crore as of March 31, 2025, which accounts for 23.88 per cent of the state's Gross State Domestic Product (GSDP). This significant increase from the ₹91,985 crore recorded in 2015-16 reflects the rapid growth of the state's debt burden.
Furthermore, the report highlights a critical concern regarding government guarantees provided to state-run entities and special purpose vehicles. These outstanding guarantees hit an all-time high of ₹2,41,528 crore by the end of March 2025. Telangana stands as an outlier in this regard, being the only state where such contingent liabilities surpass 10 per cent of its GSDP. While the state's ability to generate revenue is significant, the combination of rising public debt and extensive guarantees continues to place pressure on its long-term fiscal stability and economic management strategies.
