State’s borrowing likely to hit ceiling
Hyderabad:The state government has proposed to raise Rs 9,600 crore through open market borrowings during the third quarter of the current financial year (October-December 2025-26), according to data released by the Reserve Bank of India (RBI) on Friday.
The move is under close scrutiny as it risks breaching the Central government’s Fiscal Responsibility and Budget Management (FRBM) limit since the state has already raised Rs 48,000 crore loans in the first half of this fiscal (April-September). As such, the state government will be allowed to raise only Rs 6,009 crore for the remaining half (October-March), but the government plans to raise around Rs 3,600 crore more.
Official sources in the finance department said that of the Rs 48,000 crore raised in the first half of the fiscal, Rs 32,303 crore was used to repay high-interest loans taken by the previous BRS government for the Kaleshwaram lift irrigation scheme (KLIS) and other projects.
This included Rs 11,447 crore towards interest payments and Rs 20,856 crore towards principal repayment. The BRS administration had borrowed from commercial banks at rates as high as 12 per cent for various projects.
Following repeated appeals from Chief Minister A. Revanth Reddy, the Centre in August approved Telangana’s proposal to reschedule Rs 25,000 crore of such high-interest loans at lower rates. The rescheduled loans from the RBI now carry interest between 7 and 7.5 per cent, compared to the 10-12 per cent charged earlier, reducing the debt servicing burden on the state exchequer.
Telangana had projected Rs 64,539 crore to be raised through open market borrowings during 2025-26 but the Centre capped this at Rs 54,009 crore in line with FRBM norms. Of this, the state already raised Rs 48,000 crore between April and September — 90 per cent of the permitted ceiling — leaving only Rs 6,009 crore available for the remaining six months.
Sources said the government plans to seek an enhancement of its FRBM limit by nearly Rs 10,500 crore, from Rs 54,009 crore to the originally projected ₹64,539 crore, to accommodate the additional borrowings.
For the October–December period, the state has proposed to raise Rs 1,000 crore each on October 14 and October 28, Rs 1,600 crore on November 11, Rs 1,000 crore on November 18, Rs 1,000 crore on November 25, Rs 2,000 crore on December 9 and another Rs 2,000 crore on December 23.
