Telangana to raise Rs 12,000 crore via market borrowings in July–September quarter

Telangana will raise Rs. 12,000 crore through market borrowings in July–September, pushing total borrowings to Rs. 29,400 crore for the first half of 2025–26. Experts warn repeated overshooting without matching revenue growth may impact financial stability.

Hyderabad: The Telangana government is set to raise Rs. 12,000 crore through market borrowings in the second quarter (July–September) of the 2025–26 financial year, marking a continued dependence on debt to meet financial obligations amid slow revenue growth and rising expenditure.

According to the Reserve Bank of India’s (RBI) latest auction calendar for State Development Loans (SDLs), the State government has scheduled 11 tranches of borrowings, beginning with Rs. 1,500 crore each on July 1 and August 12, and Rs. 1,000 crore each on nine other dates spread across July, August and September.

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This fresh borrowing plan follows the State government exceeding its borrowing projections in the first quarter (April–June), during which it raised Rs. 17,400 crore through SDL auctions, overshooting the indicative borrowing estimate of Rs. 14,000 crore by Rs. 3,400 crore.

With this, Telangana’s cumulative market borrowings in the first half of the financial year will reach Rs. 29,400 crore, nearly 46 per cent of the annual borrowing estimate of Rs. 64,539 crore for 2025–26.

Despite the rise in borrowings, the State witnessed only a marginal increase of Rs. 200 crore in tax revenue during April–May compared to the same period last year. Paired with increased spending, this has put additional pressure on the State’s fiscal position.

Finance department officials, however, insisted that the borrowings remain well within the permissible limits of the Fiscal Responsibility and Budget Management (FRBM) Act. The funds, they said, are being channelled towards welfare schemes and clearing pending dues.

Experts, however, have sounded a note of caution, warning that the consistent overshooting of borrowing projections without matching growth in capital expenditure or revenue generation could impact Telangana’s creditworthiness and limit its future borrowing capacity.

“The absence of capital expenditure growth to balance these borrowings is a red flag,” an analyst said. “If this trend continues, it could erode investor confidence and weigh on the State’s long-term financial stability.”

With bond auctions scheduled nearly every week in the July–September quarter, fiscal analysts have called for tighter scrutiny to ensure the funds are deployed in a revenue-generating and fiscally sustainable manner.