The Telangana government is grappling with a growing financial crisis as escalating pension and retirement benefit liabilities threaten the State’s fiscal stability. Projections suggest the situation could worsen over the next five years, with an estimated annual allocation of ₹15,000 crore to ₹16,000 crore required to meet these obligations.
Rising Number of Retirees Strains State Budget
Data from the Treasuries and Accounts department highlights the increasing burden. The number of retirees surged from 1,602 in 2023 to 7,995 in 2024, and the trend is expected to continue. Projections indicate 9,630 retirements in 2025, 9,719 in 2026, and 9,443 in 2027. This steady increase adds significant pressure to the State’s already strained budget.
Pension Expenditure on the Rise
The pension expenditure, influenced by salary hikes implemented by the previous BRS government, has seen a sharp rise over the past decade. Starting at ₹4,210 crore in 2014-15, it doubled to ₹8,217 crore in 2015-16 and peaked at ₹13,024 crore in 2023-24. Although the budget for 2024-25 allocated ₹11,641.38 crore for pensions, ₹10,069.45 crore has already been disbursed by October, indicating the need for fresh funds to cover the remaining months of the fiscal year.
Delayed Payments and Mounting Dues
The State is struggling to meet its current financial commitments, including pensions and retirement benefits. Over the past year, no government pensioner has received retirement benefits, with the government owing approximately ₹2,000 crore to retirees this fiscal year. To address the backlog, the government recently decided to mortgage Telangana State Industrial Infrastructure Corporation (TGIIC) lands to raise ₹10,000 crore, of which ₹2,000 crore will be allocated for retirement benefits.
Employee Unions Demand Action
Clearing arrears and retirement benefits was a key demand from employee union representatives during a recent meeting with Chief Minister A. Revanth Reddy and Deputy Chief Minister Mallu Bhatti Vikramarka. Retirement benefits for government employees range from ₹25 lakh to ₹1 crore, depending on their cadre and experience. Currently, pensions and retirement benefits account for nearly 13% of the State’s revenue receipts.
Experts Warn of Economic Risks
Economic experts have raised concerns over the sustainability of the government’s financial policies. They caution that without stringent fiscal reforms, such as exploring alternative revenue sources and rationalising expenditures, the rising pension liabilities could push Telangana into a deeper economic crisis.
The Telangana government now faces the challenge of balancing immediate financial obligations with long-term fiscal planning to avoid further economic instability.
