Hyderabad: The Telangana government undertook Telangana loan restructuring of nearly Rs.27,988 crore, reducing repayment burden and improving liquidity, Finance Minister Bhatti Vikramarka Mallu said in the Budget.
The Telangana loan restructuring targeted high-interest borrowings taken earlier. The government said these loans had created pressure on finances and limited fiscal flexibility. Therefore, it initiated a plan to lower interest rates and extend repayment timelines.
Loans worth Rs.25,612 crore were refinanced at lower interest rates. Repayment periods were extended between 20 and 39 years. As a result, the repayment burden between 2025-26 and 2031-32 dropped sharply.
The liability reduced from Rs.34,058 crore to Rs.11,915 crore. This led to a cash outflow reduction of Rs.22,142 crore. The government said this created space for welfare and development spending.
The Finance Minister stated that excessive borrowings earlier had strained State finances. He added that fiscal discipline was necessary to ensure long-term stability.
Telangana loan restructuring improves fiscal stability
The Telangana loan restructuring also covered borrowings by State agencies. Loans of Rs.172.02 crore by TUFIDC and Rs.2,204.06 crore by the Telangana Road Development Corporation were refinanced.
Their interest rates were reduced from above 9 per cent to 8.6 per cent. This further lowered the financial burden on government-linked entities. It also improved overall fiscal efficiency.
The government said it strengthened ties with the Centre to increase fund inflows. Funds under Centrally Sponsored Schemes rose to Rs.7,072 crore. Earlier, they stood at Rs.4,826 crore in 2021-22.
Pending dues of nearly Rs.3,000 crore were cleared. This restored eligibility for future central assistance. It also improved implementation of schemes across departments.
The Finance Minister raised concerns about tax devolution. Telangana received about 42 paise for every rupee contributed to the Centre. The State made representations before the 16th Finance Commission.
Following this, the share increased from 2.102 per cent to 2.174 per cent. The government said this would support revenue flows and development programmes.
Overall, Telangana loan restructuring was projected as a key reform. It aims to stabilise finances, reduce interest burden and create fiscal space for welfare and infrastructure spending.