Telangana exhausts 85 per cent of annual loan limit in six months as revenues lag
Telangana borrowed Rs 45,900 crore in six months of 2025-26, reaching 85 per cent of its annual limit, while revenue collection lags. Experts warn of a possible fiscal crisis within three years if corrective measures are not taken
Hyderabad: The Congress government in Telangana has pushed the State into a precarious financial corner by borrowing recklessly even as revenues stumble, raising fears of a looming debt trap. The government borrowed Rs 45,900 crore in just six months (April-September), which is a staggering 85 per cent of the Rs 54,009 crore annual borrowing limit set by the Centre for 2025-26.
The latest report of Comptroller and Auditor General (CAG) reinforced this grim picture. In the five months up to August, the State had mobilised Rs 33,415.15 crore, which is 62 per cent of its annual market borrowings. However, it lagged behind in realising revenue mobilisation, with only Rs 63,219 crore, barely 34 per cent of the annual revenue target of Rs 2,29,720 crore.
With Rs 12,000 crore borrowed in September alone, the State is now left with a wafer-thin window of only Rs 8,109 crore for the remaining six months of the financial year.
This mismatch between borrowings and receipts has set off alarm bells among economists. The State has not only front-loaded its debt, but is also spending heavily on non-productive heads. The capital expenditure accounted for Rs 13,921.17 crore, which is just 39 per cent of the annual target. Salaries, pensions, and subsidies accounted for much of the rest, leaving little room for developmental expenditure.
The tax revenues continued to perform worse than last financial year, with only the State’s share in union taxes showing a visible increase to 40.32 per cent of annual target realised till August 2025-26 from 33.83 per cent for the corresponding period last year. Tax revenues from GST, stamps and registration, sales tax, excise revenue and others were poorer than the previous fiscal.
Even more worrying is the ballooning fiscal deficit. By August, it had already touched Rs 33,415 crore, which is nearly 62 per cent of the annual estimate. The State’s revenue stood at an alarming Rs 11,052 crore deficit, more than four times the revenue surplus outlay of Rs 2,738.33 crore.
Surprisingly, two other Congress-ruled States, Karnataka and Himachal Pradesh, borrowed far lesser than Telangana. Till August this year, Karnataka borrowed Rs 19,113.29 crore, which is 21.14 per cent of its annual borrowing limit of Rs 90,428.23 crore. This is higher compared to last year’s 16.31 per cent. Himachal Pradesh raised Rs 4,351.68 crore through market borrowings, which is 41.91 per cent of its annual limit. This is significantly higher than 34.54 per cent of annual loan obtained for the corresponding period last year.
As for Telangana, experts argued that the borrowing binge is symptomatic of fiscal indiscipline and political expediency. With local body elections approaching, the Revanth Reddy government appears to be resorting to short-term fixes rather than structural corrections. The State is piling debt at unsustainable levels without matching efforts to widen its revenue base.
Financial analysts cautioned that if this pace continues, Telangana could face a full-blown fiscal crisis within three years. The burden of servicing today’s loans will crowd out future spending on welfare and infrastructure, hurting the very people the government claims to serve.
In effect, the State is living off borrowed money, while its revenue engine sputters. Unless corrective action is taken by expanding tax collections, rationalising expenditure, and enforcing fiscal prudence, Telangana risks plunging deeper into a debt spiral.
Telangana’s market borrowing for 2025-26
– Telangana mobilised 62 per cent of its annual market borrowings, but realised only 34 per cent of its annual revenue target in first five months.
– Huge mismatch between between borrowings and receipts
– In first six months, Congress government borrowed Rs 45,900 crore i.e. 85 per cent of the Rs 54,009 crore annual borrowing limit.
– Telangana now left with only Rs.8,109 crore to borrow for remaining six months of FY
– Borrowing (August) was Rs 33,415.15 crore.
– Revenue (August) was Rs 63,219 crore.
– Latest report of Comptroller and Auditor General reveals precarious financial position
– Not much spent as developmental expenditure
– Financial analysts warn that Telangana could face full-blown fiscal crisis within 3 years
– Call for expanding tax collections, rationalising expenditure, enforcing fiscal prudence to prevent crisis
– Other Congress-ruled States, Karnataka and Himachal Pradesh have borrowed far lesser
