Hyderabad: The state government has decided to raise Rs 30,000 crore in loans through market borrowings during the final quarter (January-March 2024-25) of the current fiscal year. The decision, outlined in the indicative calendar of market borrowings released by the Reserve Bank of India (RBI), involves raising Rs 10,000 crore each in the months of January, February, and March.
According to a report from the Comptroller and Auditor General of India (CAG), the state government had already raised Rs 37,850 crore in market borrowings during the fiscal year 2024-25 up until November 2024. An additional Rs 2,909 crore was raised in December, bringing the total market borrowings to Rs 40,759 crore by the end of December 2024.
This proposed Rs 30,000-crore loan in the final quarter would increase the total market borrowings for the entire fiscal year 2024-25 to a staggering Rs 70,759 crore. However, this raises concerns as Telangana is bound by the Fiscal Responsibility and Budget Management (FRBM) Act, which sets a borrowing limit.
According to FRBM norms, the state is eligible to borrow a maximum of `57,112 crore during this fiscal year, a limit already reflected in the state's Budget for 2024-25 presented in July 2024.
With the proposed additional `13,647 crore in borrowings exceeding the prescribed FRBM limits, questions are now being raised about whether the Central government will grant approval for this borrowing beyond the ceiling. The state will require the Centre’s approval to enhance the FRBM limit to accommodate the extra borrowing.
The detailed calendar of borrowings released by the RBI further outlines the timing and amounts to be raised. On January 7, the state government plans to raise `3,000 crore, followed by `2,000 crore on January 14, `2,500 crore on January 21, and `2,500 crore on January 28. Similarly, in February, borrowings include `3,000 crore on February 4, `2,000 crore on February 11, `2,500 crore on February 18, and `2,500 crore on February 25. In March, the borrowing schedule comprises `3,000 crore on March 4, `2,500 crore on March 11, `2,000 crore on March 18, and `2,500 crore on March 25.
As of March 2024, Telangana’s outstanding market borrowings stood at Rs 3.89 lakh crore, according to the RBI’s latest report, Handbook of Statistics on Indian States. This reflects a significant increase from Rs 72,658 crore in 2014-15, the year Telangana was formed. Over the past ten years under the BRS regime, the state’s debt burden has ballooned substantially.
When factoring in loans secured by the previous BRS regime through various state-run corporations under bank and non-bank guarantees, Telangana’s total debt burden is now estimated to be nearly `7 lakh crore. This mounting debt load has raised concerns about the state’s fiscal health and its ability to sustain future borrowings.
