Center approves Telangana govt’s request to raise Rs 9K crore loan

The previous government had exhausted the 2023-24 loan limit, restraining the new Congress government from raising loans for the rest of the fiscal year.

Hyderabad: Granting relief to the Congress government in the state, the Center approved the state’s request to raise an additional loan of Rs 9,000 crore through the auction of bonds in the last quarter of this financial year.

After coming to power in the state, the new Congress government struggled financially as the former BRS government had exhausted its annual quota before the Assembly elections. The newly elected chief minster Revanth Reddy was forced to seek the Union government’s approval to raise additional loans.

The CM had met Prime Minister Narendra Modi and Union finance minister Nirmala Sitharaman in Delhi on December 26 to bring to their notice that the previous government had exhausted the 2023-24 loan limit, restraining the new Congress government from raising loans for the rest of the fiscal year.

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Reddy complained that the BRS government had pushed Telangana state into a debt trap with its financial mismanagement and urged them to sanction additional loans.

The Reserve Bank of India issued a notification on Friday allowing the state government to participate in the auction of bonds to raise Rs 2,000 crore on January 16 after the Center approved the state’s request to raise Rs 9,000 crore, which is lower than the initially requested Rs 13,000 crore.

The Telangana state government’s borrowing limit under the Financial Responsibility and Budget Management (FRBM) Act for 2023-24 was initially set at Rs 57,813 crore.

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However, the Centre reduced this limit to Rs 42,225 crore, taking into account off-budget borrowings by state-run corporations.

The state government exceeded this revised limit by borrowing a total of Rs 42,551 crore, which is Rs 300 crore higher than the revised limit.

This excess borrowing was partly due to the need to disburse funds for the Rythu Bandhu scheme and other welfare programs.

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