HYDERABAD: Telangana's debt increased by over ₹1.6 lakh crore in the past 26 months, according to budget figures. The borrowings were raised within the limits set under the Fiscal Responsibility and Budget Management (FRBM) framework.
The increase in Gross State Domestic Product (GSDP) allowed the state to expand its borrowing capacity.
The government said it restructured some high-interest loans taken earlier to reduce the burden on the exchequer. Chief Minister Revanth Reddy and Finance Minister Bhatti Vikramarka said a major portion of the new borrowings was used to repay debts raised by the previous government.
Loan restructuring reduces interest burden over time
As per budget data, total liabilities under the FRBM framework stand at ₹5,62,383 crore. Loans raised through special purpose vehicles (SPVs) with government guarantees, to be repaid by the government, amount to ₹86,309 crore.
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Loans taken by SPVs with government guarantees but repayable by those entities stand at ₹1,55,434 crore. Corporations have raised ₹60,292 crore without government guarantees. Together, the total debt burden stands at ₹8.64 lakh crore, compared to around ₹7 lakh crore in 2023-24.
The government said loans raised through the Kaleshwaram Corporation carried interest rates above 10%, increasing the burden. It added that ₹25,612 crore worth of such loans had been refinanced at lower rates, and repayment tenure extended from 20 to 30 years, Bhatti Vikramarka said in the budget speech.
Debt rises sharply since state formation
According to finance department data, Telangana's debt stood at ₹90,161 crore as of June 2, 2014. It rose to ₹6,69,257 crore by December 1, 2023, and further to ₹8,07,910 crore by February 28, 2026.
During the current government's tenure, debt increased by ₹1,88,853 crore, crossing ₹1.6 lakh crore in March. Between December 1, 2023, and February 28, 2026, the state raised ₹3,47,349 crore in loans.
Out of this, ₹2,08,600 crore was spent on principal repayment and ₹1,22,153 crore on interest. The government said a total of ₹3,30,740 crore was used to service past debt and interest.
Officials said lowering interest rates below GSDP growth would reduce future debt pressure and increase fiscal space. Earlier, higher interest rates compared to GSDP growth had led to a rise in debt burden.