Congress set to seek more loans as Telangana stares at financial strain

The Congress government in Telangana is planning to take more loans to fund welfare and development projects. Chief Minister A Revanth Reddy said foreign pension funds are willing to lend at low interest rates, subject to Central government approval

Hyderabad: After borrowing nearly Rs 2 lakh crore since December 2023, the Congress government is preparing to take more loans to meet expenditure and mobilise funds for welfare and development programmes.

Despite heavy borrowing in a short period, there has been no major infrastructure development in the State. Except for the partial implementation of a few welfare schemes, the government has made little progress in developing roads or executing major projects.

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Though foundations were laid for irrigation projects such as the Narayanpet Kodangal Lift Irrigation Project, the new Osmania General Hospital building and the Skills University, the works are progressing slowly due to a shortage of funds.

A major portion of the Palamuru Rangareddy Lift Irrigation Project was completed by the previous government, yet the present government has not been able to complete the remaining works in the last two years.

Chief Minister A Revanth Reddy has repeatedly presented a grim picture of the State’s finances. At a press conference on Friday, he said only Rs 5,000 crore remained with the government each month after paying salaries and loan repayments.

To pull the State out of the financial crisis, a detailed review of the State’s finances is underway. The Chief Minister said several entities under pension funds in other countries were ready to offer thousands of crores at very low interest rates, but securing such loans required the Centre’s approval.

Defending the move to seek more loans, he said the previous government had taken loans at interest rates of eight to eleven and a half percent with tenures of ten to fifteen years, which imposed an additional burden on the State exchequer. If the tenure was increased to thirty-five to forty years and loans secured through pension funds at two to three percent interest, it would provide relief to the government, he said.

“Metro expansion plans have been prepared with an estimated cost of Rs 43,000 crore. If the Centre gives a sovereign guarantee, Rs 40,000 crore loans can be secured,” the Chief Minister said.

Interestingly, while in the opposition, the Congress had criticised the BRS government for resorting to loans. Though the Centre informed Parliament this year that Telangana’s debts over ten years stood at Rs 3.5 lakh crore, Congress leaders continue to claim that the previous government left a debt of Rs 8.21 lakh crore.