Telangana debt burden likely to exceed 10 per cent this fiscal

As per FRMB norms, the Centre allowed States to borrow up to three per cent of GSDP.

Hyderabad: The State government’s interest burden on debts is set to go 10 per cent beyond the stipulated revenue collection this year.

The government has been mobilising massive loans through budgetary and non-budgetary routes to fund its various populist measures like the 2BHK housing scheme, irrigation projects and Mission Bhagiratha.

The interest burden for this fiscal (2017-18) is projected to touch nearly Rs 11,500 crore, which is more than 10 per cent of the projected revenue collection of Rs 79,000 crore.

Despite being revenue surplus, the government was set to lose the opportunity to borrow more under FRBM norms due to increased interest burden next year.

As per FRMB norms, the Centre allowed States to borrow up to three per cent of GSDP. But for revenue-surplus states, it allows up to 3.5 per cent. Only Gujarat and Telangana would qualify for this.

The Centre had allowed Telangana to borrow up to 3.25 per cent of GSDP in 2016-17 and 3.5 per cent in 2017-18 on condition that the debt servicing and interest burden should not exceed 10 per cent of total receipts (revenue collection). However, the recent government statistical year book for 2017 projected interest burden to be Rs 11,338 crore, which would be more than 10 per cent of revenue projection of Rs 79,623 crore. The interest burden was Rs 7,942 crore in 2015-16.

The book projected the total receipts, including revenue receipts (Rs 79,624 crore), non-tax revenue (Rs 6,601 crore) and grants-in-aid and contribution (Rs 26,857 crore) at Rs 1.13 lakh crore during the same period.

Official sources said the higher interest burden was on account of the Rs 20,000 crore secured for irrigation projects and Rs 10,000 crore for Mission Bhagiratha and 2BHK housing scheme.

All these schemes were major poll promises of the TRS government for ensuing 2019 Assembly elections, the government was exploring all the debt options to complete these projects.

However, the government was worried over the Centre declining 3.5 per cent borrowing limit in 2018 in the crucial election year on the ground of interest burden exceeding 10 per cent.

With the Centre increasing borrowing limit this year, the state’s loan eligibility increased to Rs 25,019 crore from Rs 21,445 crore, which may be not possible next year.


  • As per FRMB norms, the Centre allowed States to borrow up to three per cent of GSDP.
  • Revenue-surplus states, however, can borrow up to 3.5 per cent, if the interest burden doesn’t exceed 10 per cent of revenue.
  • TS interest burden this year has crossed the 10 per cent cap, making future loans doubtful.
( Source : Deccan Chronicle. )
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