Hyderabad, June 11: Telangana’s outstanding public debts are projected to increase by about 11 percent in the fiscal year 2023-24, reaching Rs 3.57 lakh crore, as per the 2023-24 Budget. This marks a steady rise from the previous year’s debt of Rs 3.22 lakh crore. Including loans taken by state public sector enterprises, the overall debt burden has reached Rs 4.33 lakh crore.
Despite facing criticism from opposition parties accusing it of pushing Telangana into a debt trap, the Bharat Rashtra Samithi (BRS) government insists that its debts remain within the permissible limits defined by the Fiscal Responsibility and Budget Management (FRBM) framework.
In terms of the debt-to-Gross State Domestic Product (GSDP) ratio, Telangana’s debt burden for 2023-24 is expected to be 23.8 percent, a slight decrease from 24.3 percent in the previous year, and well below the limit of 25 percent set by the FRBM guidelines.
The interest payment for the current financial year is estimated to be Rs 22,407 crore, a rise from Rs 18,911 crore in the previous year.
Opposition parties, however, claim that the actual debt of the state is much higher than what is shown in the Budget. Union Minister for Tourism G. Kishan Reddy recently alleged that the state’s debts had escalated to Rs 8 lakh crore. He accused the BRS government of burdening Telangana with debts over the past nine years, leading to difficulties in paying salaries to employees and bills to contractors.
According to information provided by the Union Finance Ministry in February 2023, the total debt of the Telangana government and state public sector enterprises has reached Rs 4.33 lakh crore. Of this, the state government debt accounts for Rs 2.83 lakh crore, while loans acquired by state government enterprises/institutions from commercial banks amount to around Rs 1.31 lakh crore, and those obtained from NABARD are Rs 19,431 crore.
Telangana, which celebrated its 10th formation day on June 2, had a debt of Rs 75,577 crore at the time of its formation in 2014. Over the last eight years, the state government has accumulated an additional debt of Rs 2.07 lakh crore.
Despite the increase in debt, Telangana remains among the bottom five major states with the lowest debt-to-GSDP ratio for three consecutive financial years. In 2020-21, 2021-22, and 2022-23, the debt-to-GSDP ratio stood at 28.2, 27.4, and 28.2, respectively.
Union Minister of State for Finance Pankaj Chaudhary stated in the Lok Sabha that the outstanding debt of Telangana from the years 2014-15 to 2021-22 amounts to Rs 2.83 lakh crore. The public debt of Telangana has nearly quadrupled since the state’s formation in June 2014 until the financial year 2021-22.
The state has consistently relied on public borrowing, with an initial borrowing of Rs 8,121 crore in its first year of formation. This borrowing trend continued over the years, resulting in a significant increase in the outstanding public debt.
The state government has also stood as a guarantor for multiple state-owned public sector undertakings and corporations that have obtained loans amounting to Rs 1.50 lakh crore from several
public sector banks, NABARD, and other central lending agencies.
The Finance Ministry report revealed that Telangana’s debt-to-GSDP ratio increased from 15.7 percent in 2016 to 27.4 percent in 2022 (budget estimates). However, the state government argues that its debt burden remains comparatively low, and it has utilized the borrowed funds for capital expenditure and asset creation, including projects like Kaleshwaram Project, Mission Bhagiratha, and Mission Kakatiya.
Both the state and central governments have engaged in blame games, with the Telangana finance minister claiming that the union government owes Rs 1,05,812 crore to Telangana in pending funds, grants, and compensation. The state government believes that if these funds are released according to norms and recommendations, it can clear one-third of its state debts, which amount to Rs 3.29 lakh crore.
While the debt burden of Telangana is a subject of political debate, it remains below the FRBM limits and ranks 23rd in the country in terms of debt, as per the Reserve Bank of India report.
