Debt drives Telangana finances as borrowings cross budget targets

Telangana’s finances are increasingly dependent on borrowings, with market loans crossing the budget estimate by over 53 per cent. Data shows a widening gap between revenue generation and expenditure, raising concerns among economists about the sustainability of the State’s financial management.

Hyderabad: Telangana’s finances are alarmingly riding on borrowed money. Till January in the current fiscal, market borrowings alone accounted for nearly 34 per cent of the total receipts. Market borrowings alone till the first week of March stood at around 53 per cent over and above the annual approval, with the final borrowings expected to reach nearly 60 per cent.

Official data till January end showed that a substantial portion of the State’s income this financial year came through loans rather than revenue generation. This has triggered concerns among economists about the sustainability of the government’s financial management.

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According to available estimates and audit calculations, the State reported total receipts of about Rs 2,07,558 crore in the first ten months of the 2025–26 financial year. Of this, tax revenue stood at Rs 1,26,293 crore, while capital receipts, which largely comprised borrowings, amounted to Rs 69,148 crore. In effect, nearly Rs 70,000 crore of the government’s inflows came through debt.

Market borrowing has surged far beyond projections. The annual borrowing estimate in the State Budget for 2025-26 was Rs 54,009 crore. Yet, by early March, total borrowings had already reached around Rs 83,300 crore, exceeding the target by more than 53 per cent. The latest tranche came earlier this week when the government raised Rs 2,500 crore through the Reserve Bank of India’s auction of State Development Loans (SDLs).

Quarter-wise borrowing from the RBI also indicates a steady rise. The State raised Rs 17,400 crore in the first quarter, Rs 32,500 crore in the second quarter and Rs 18,400 crore in the third quarter before continuing the borrowing spree in the final quarter. Sources said the government might raise another Rs 3,000 crore by the end of the current fiscal, with three more weeks left for the financial year to end. Telangana has already exceeded its indicative borrowing of Rs 10,600 crore for the last quarter and obtained around Rs 15,000 crore.

These borrowings are in addition to around Rs 80,000 crore of off-budget loans raised through various corporations and affiliated organisations.

Meanwhile, the numbers highlight a widening gap between revenue generation and expenditure commitments. The State government had projected revenue receipts of Rs 2,29,720 crore in the 2025–26 Budget. However, by January, only Rs 1,38,371 crore, which is about 60.23 per cent of the target, had materialised. If revenue receipts during February and March projections are any indication, officials are expecting revenue receipts to reach Rs 1.7 lakh crore during the current financial year, which still falls short of the annual target by nearly Rs 60,000 crore.