Raghava Rao is a theatre artist who was given the title Rangamarthanda. As he grows older, he decides to retire and distributes his wealth among his children, Sri and Ranga who mistreat him and his wife Raju Garu.

Balagam is set in a village in Telangana and it revolves around the after effects on a family and its relations, both with the village folks and among themselves, after the jovial patriarch of the family suddenly passes away.