Centre Slashes Telangana Loans by Rs 7,000 Crore in Feb After State Govt Breaches FRBM Limit
The state faces financial strain as borrowing requests were cut from Rs 10,000 to Rs 3,000 crore for February.
Hyderabad: The Centre has imposed a cut in Telangana’s borrowing limit for February, reducing the state's request from Rs 10,000 crore to just Rs 3,000 crore. This follows a similar cut of Rs 4,200 crore in January, adding to the state's financial constraints.
The Telangana government had sought approval to raise Rs 30,000 crore in open market borrowings for the final quarter of the fiscal year 2024-25 (January-March). The proposal included Rs 10,000 crore each for January, February, and March through the auction of state government securities by the Reserve Bank of India. However, the Centre granted permission for only Rs 5,800 crore in January and Rs 3,000 crore in February.
For February, the state had planned to raise funds in four phases — Rs 3,000 crore on February 4, Rs 2,000 crore on February 11, Rs 2,500 crore on February 18, and Rs 2,500 crore on February 25. However, the Centre permitted the borrowing scheduled on February 4, rejecting the rest.
Similarly, the government has requested borrowings in March, which includes Rs 3,000 crore on March 4, Rs 2,500 crore on March 11, Rs 2,000 crore on March 18, and Rs 2,500 crore on March 25. The final approval for these requests remains uncertain, with officials expecting the Centre to allow only a limited amount, likely around Rs 3,000 crore.
In the budget presented in July last year, the Telangana government had proposed borrowing Rs 57,112 crore for the entire fiscal year. However, citing Fiscal Responsibility and Budget Management (FRBM) norms, the Centre reduced this limit to Rs 49,255.41 crore, leading to a shortfall of Rs 7,857 crore.
Despite the imposed restrictions, Telangana had already raised Rs 58,586.64 crore by January 31, 2025 — exceeding the permissible limit by 119 per cent. With the additional Rs 3,000 crore borrowed in February, the total borrowing now stands at Rs 61,586.64 crore, significantly above the approved ceiling of Rs 49,255.41 crore.
Given these financial circumstances, finance department officials believe that the Centre is unlikely to approve Telangana's request for an additional Rs 10,000 crore in March, further straining the state’s fiscal planning. Finance department officials anticipate a marginal approval of up to Rs 3,000 crore at best.