Telangana opens fiscal year with aggressive borrowing plan, sparks concerns

Telangana plans to borrow Rs 18,900 crore in the first quarter of 2026–27 as part of a Rs 73,383 crore borrowing programme. Experts warn that early market borrowing and rising debt could strain the State’s fiscal discipline and internal resource mobilisation

Hyderabad: The Telangana government began the 2026-27 financial year with an aggressive borrowing plan, seeking to mobilise Rs 18,900 crore in the first quarter alone, according to the Reserve Bank of India’s (RBI) borrowing calendar. The early move to tap markets sparked concerns over the State’s rising dependence on debt to sustain expenditure.

For the current fiscal, the State projected borrowings of Rs 73,383 crore. Within the current quarterly plan, the government already initiated borrowings for April, proposing to raise Rs 3,900 crore through RBI auctions on Tuesday. This includes Rs 2,000 crore via 17-year securities and Rs 1,900 crore through 30-year bonds, signalling the Congress government preferring long-term debt instruments at the very outset of the financial year.

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The front-loading of borrowings came notwithstanding a sharp overshoot in the previous financial year. In 2025–26, Telangana raised Rs 85,840 crore which is nearly 59 per cent above its budgeted borrowing target of Rs 54,009 crore.

Pointing to trends from the previous year, financial experts fear a pattern of exceeding targets and increased stress on revenue generation. They pointed out that such reliance on market borrowings, especially early in the financial year, might affect liquidity pressures and restrict internal resource mobilisation.

The Congress government already raised Rs 3.47 lakh crore including Rs 1.62 lakh crore FRBM loans and another Rs 1.54 lakh crore non-FRBM loans in the last 29 months. Comparatively, the previous BRS government raised Rs 3.5 lakh crore of outstanding debt (FRBM loans) and another Rs 1.47 lakh crore of government-guaranteed (non-FRBM) loans over a decade.

Experts stated that despite steady increase in debt, the State government was using the borrowings for routine expenditure including welfare commitments and contract payments, rather than asset creation. They cautioned that regular dependence on loans to meet recurring obligations was a sign of weakening fiscal discipline and suggested that State government take immediate measures before the situation spirals down further.

Growing Burden

Budget borrowings for 2026-27: Rs 73,383 crore
Borrowing plan for April-June 2026: 18,900 crore
Borrowings for 2025-26: Rs 85,840 crore against projected Rs 54,009 crore
Borrowings for 29 months of Congress rule: Rs 3.47 lakh crore