Hyderabad: Telangana has secured eighth position in the ‘Financial Health Index 2025′ released by NITI Aayog recently, classifying it as a front-runner state. Other states categorised alongside Telangana include Maharashtra, Uttar Pradesh, Madhya Pradesh, and Karnataka in this category.
The report highlights encouraging revenue growth in Telangana but suggests the state should increase its capital expenditure, particularly in the social sectors of health and education.
“This indicates that the state should concentrate on priority areas that serve a larger population, such as health and education. These sectors benefit not only govt scheme beneficiaries but also the general public. It is crucial to strike a balance between both aspects and take necessary steps to reduce out-of-pocket health expenses in the state,” stated SVS Chandra, a finance expert.
Telangana allocates a lower percentage of its total expenditures to health and education than other major states. Health spending as a proportion of total expenditures also decreased from 4.67% in 2018-19 to 4.57% in 2022-23.
The report indicates that while the state’s developmental expenditure has grown due to increased spending on economic services, capital expenditure and spending on health and education have declined. The state’s developmental expenditure as a ratio of total expenditure stands at approximately 0.70, which is higher than the average of other major states.
Over the past five years, the outstanding public debt growth rate has ranged from 11.9% to 19.1%. However, the ratio of outstanding debt to Gross State Domestic Product (GSDP), which had been increasing annually until 2020-21, has decreased over the past two years.
The ratio fell to 27.2% in 2022-2023 compared to 28.6% in the previous year. Additionally, the average interest rate on outstanding public debt has decreased from 8.2% in 2018-19 to 7.6% in 2022-23.
Nevertheless, the state’s reliance on debt has resulted in a significant portion of resources being allocated to debt and interest payments, which have surged by 73%, increasing from 12,586 crore in 2018-19 to 21,821 crore in 2022-23.
