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T’gana govt borrowed ₹49,618 crore in last 10 months, says deputy CM
In its report submitted to the 16th finance commission at a meeting held in Hyderabad on September 10, the Telangana government put the overall debt outstanding of the state at ₹6.85 lakh crore
The Telangana government on Thursday admitted that the state was going through a financial crisis, forcing it to resort to more market borrowings to tide over the crisis and meet the expenditure on salaries and welfare schemes.
An official statement from deputy chief minister Mallu Bhatti Vikramarka, who also holds the finance portfolio, said the state government had gone in for market borrowings to the extent of ₹49,618 crore since the Congress came to power in the state in December 2023 till October 15 this year.
“However, during this period, the government has repaid principal and interest on the outstanding borrowings done by the previous government in the last 10 years. The repayment of principal and interest was to the extent of ₹56,440 crore, which is much more than the borrowings made by the Congress government since December last,” the statement added.
In its report submitted to the 16th finance commission at a meeting held in Hyderabad on September 10, the Telangana government put the overall debt outstanding of the state at ₹6.85 lakh crore. Chief minister A Revanth Reddy appealed to the Centre to either restructure the debts or extend additional assistance to bail out the state from deep debts.
The official statement from the finance minister’s office said apart from repaying the principal and interest on the outstanding loans, the state government had spent ₹21,881 crore under capital expenditure during the last 10 months.
“Besides, another ₹54,346 crore was spent on various flagship schemes such as crop loan waiver, Rythu Bharosa (payment of input cost for farmers), Cheyutha, LPG subsidy under Mahalakshmi scheme, Gruha Jyothi (free power supply to domestic consumers below 200 units), power subsidy, rice subsidy, scholarships to students, reimbursement to Road Transport Corporation for free bus travel for women, Kalyana Lakshmi/Shaadi Mubarak (marriage expenses for poor couples) etc.,” it said.
The deputy chief minister’s office said that the government was ensuring that salaries of all the employees be paid on the first day of every month, which was not the case during the previous regime.
The Comptroller and Auditor General (CAG) in its report tabled in the state assembly in August this year, said in the next 10 years, Telangana will have to repay ₹2.67 lakh crore as principal and interest on market borrowings. “This figure does not include the ₹19,210 crore principal repayment due for borrowings from other financial institutions,” it said.
The CAG said that the overall debt sustainability suggested that the net public debt available to the government would be negative after considering the outgo on the servicing of the off-budget borrowings. “This may put significant pressure on the state finances and may push debt sustainability of the state to an undesirable level,” it said.
Stating that the financial situation of the state was worrisome with increasing debt levels and potential challenges in meeting repayment obligations, the CAG said the state government’s reliance on off-budget borrowings and the allocation of market borrowings for debt servicing raise questions about the long-term sustainability of its financial practices.
Senior Bharat Rashtra Samithi leader and former Telangana finance minister T Harish Rao said Vikramarka was misleading the people of the state on the borrowings of the state government.
“According to the deputy CM, the Congress borrowed ₹49,618 crore. However, an answer to a legislative assembly question revealed that the government had guaranteed ₹24,887.71 crore in loans as of July 26, 2024. Additionally, Telangana State Cooperative Bank obtained ₹5,000 crore from the National Cooperative Development Corporation,” he said.
Hence, the total loan taken by the Congress government in 10 months is around ₹80,000 crore. Yet, the government has failed to fulfil many of its promises, including complete crop loan waiver and non-payment of assistance to farmers under Rythu Bandhu, Rao added.
Senior economist from Hyderabad Central University RV Ramana Murthy said it has become imperative for any government to go in for market borrowings to fulfil its pre-election promises and take up development works.
“The state has to repay the loans from its own revenue sources, including tax devolutions and grants from the centre. Otherwise, it has to go in for more borrowings to service the previous debts. If the debts are well within the limits of the state’s overall economy, they can be repaid over a period of time by increasing the state revenues and pruning the unnecessary expenditure. Otherwise, it will be a huge burden on the people,” Murthy said.
