Hyderabad, Feb 1 (PTI) Telangana Deputy Chief Minister Mallu Bhatti Vikramarka on Saturday alleged that the Union Budget 2025-26 "failed" to address the crucial issues faced by the state.

The budget reflects a glaring lack of understanding and commitment to states’ unique challenges and developmental priorities in general, and that of Telangana in particular, he said in a statement.

In the Union Budget, the Centre has "strategically" reduced customs duties on certain goods while simultaneously increasing cesses. Such measures will further shrink the divisible pool of taxes, eating away at states’ share in devolution, he alleged.

The budget, with a 30.5 per cent increase in Centrally Sponsored Scheme (CSS) allocations to Rs. 5,41,850 crore (as compared to Rs.4,15,356 crore in 2024-25 (RE)), moved further away from the principles of fiscal federalism, said Vikramarka, who also holds Finance portfolio.

Despite repeated calls from states for greater autonomy and a reduction in CSS dependence, this significant increase undermines states’ fiscal autonomy and reflects a disregard for the concerns and priorities of state governments.

"The Union Budget allocates an excessive amount of funding to Bihar through various schemes and initiatives, despite the fact that the state has maintained surpluses on its revenue account and its fiscal deficit is also found to be lower than the permissible levels in many of the past years," Vikramarka said.

He rued that states like Telangana, which have demonstrated a strong capacity for effective resource utilization, on the other hand, continue to remain neglected even in the 2025-26 Union budget.

This "discrimination" undermines the efforts and achievements of Telangana and would have broader developmental repercussions, not just for Telangana, but for the country as a whole, he said.

He further alleged that Telangana's irrigation projects have been neglected.

Chief Minister A Revanth Reddy held a meeting on the Union Budget with his cabinet colleagues and officials.

State Forest Minister Konda Surekha said she was completely "disappointed" with the budget.

"I have no words to express the sadness of not receiving enough allocation to the younger state of the country, Telangana, from India's Finance Minister, @nsitharaman," she said, in a post on 'X'. PTI SJR SJR ROH

Fiscal federalism concerns: budget measures alleged to shrink state tax devolution and expand central scheme control. The Union Budget is criticised for impairing fiscal federalism by shrinking the divisible tax pool through customs duty reductions and higher cesses, and by expanding Centrally Sponsored Schemes, which allegedly undermines state fiscal autonomy and discretion over priorities. The critique alleges allocational discrimination against Telangana and inadequate support for its irrigation projects, framing the budget's mix of duty and cess adjustments and scheme-driven funding as adverse to intergovernmental equity and state developmental capacity.