Congress Govt pushes Telangana into debt spiral, plans record borrowing of Rs.30,000 crore

This massive borrowing spree is likely to not only shatter the State's budgetary estimates but also push its debt burden perilously close to the liabilities Telangana inherited at its formation in 2014

Hyderabad: The Congress government in Telangana is setting alarmingly poor records in fiscal mismanagement with its decision to borrow an unprecedented Rs.30,000 crore in the last quarter of the current financial year (2024-25).

This massive borrowing spree is likely to not only shatter the State’s budgetary estimates but also push its debt burden perilously close to the liabilities Telangana inherited at its formation in 2014.

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The government’s calendar for borrowing indicates plans to participate in auctions on all 12 Tuesdays of the January-March quarter, raising Rs.10,000 crore each month. This level of dependency on market loans showcases a lack of foresight and governance, financial experts opined.

The planned borrowing would propel the State’s market debt to Rs 70,757 crore for the year, almost equivalent to the Rs 72,658 crore in outstanding liabilities the State carried when it was carved out a decade ago.

Economists and opposition BRS leaders are raising concerns about the State’s financial health, warning that these reckless fiscal policies could cripple Telangana’s economy for years.

Under the Fiscal Responsibility and Budget Management (FRBM) Act, States are permitted to borrow up to 3.5 per cent of their Gross State Domestic Product (GSDP).

Telangana’s GSDP for 2024-25 was pegged at around Rs.16 lakh crore, allowing a borrowing ceiling of Rs.57,112 crore. However, the Centre restricted it to Rs.49,255 crore due to budgetory adjustments made during the COVID-19 period to maintain FRBM norms. But, the Congress government has already borrowed Rs.40,757 crore by December end.

The additional Rs.30,000 crore borrowing plan would overshoot the budget estimates by a staggering Rs.21,502 crore. Experts have criticized the government’s move as a blatant disregard for fiscal discipline as it is higher even by standard FRBM limits.

The Reserve Bank of India (RBI) has clarified that the actual amount of borrowing depends on approval from the union Finance Ministry under Article 293(3) of the Constitution. Yet, the State Finance department remains tight-lipped on whether the Centre has cleared this exorbitant borrowing proposal over and above the ceiling fixed for the current fiscal.

Economists point out that the Congress government’s borrowing spree is not matched by visible improvements in infrastructure or public services. Instead, these funds appear to be fueling poorly-planned populist schemes and temporary measures that do little to generate long-term economic growth.

Opposition parties, particularly the BRS, have charged the Congress government with fiscal irresponsibility. “This is not governance but financial anarchy. Telangana, a State once hailed for its fiscal prudence under K Chandrashekhar Rao, is now staring at a debt disaster due to the Congress’s reckless policies,” said a senior BRS leader.

Surprisingly, the Congress had accused the previous BRS government of pushing the State into a debt trap, despite the latter initiating numerous development works and remaining among top States in capital expenditure at the national level which propelled the State’s economic growth.