Hyderabad: A recent report from the Comptroller and Auditor General (CAG) has raised concerns about the financial future of the Telangana Government, indicating a significant repayment obligation on market borrowings.
According to the report, the state will need to repay a hefty sum of Rs 2,52,048 crore as principal and interest on market borrowings by the fiscal year 2032-33, putting immense pressure on government finances.
The CAG’s calculations are based on the outstanding market borrowings as of March 2022, estimating a repayment obligation of Rs 2,31,782 crore in the next decade starting from 2023-24.
Additionally, the state will also need to repay the principal loan amount of Rs 20,266 crore borrowed from financial institutions within the same period.
Telangana’s borrowing activities are regulated by Article 293 of the Constitution, with the government frequently resorting to market borrowings to fund various projects and meet its financial commitments. The state has often relied on these borrowings to bridge revenue deficits.
The CAG report highlights that besides the disclosed liabilities of Rs 3,14,663 crore, the state also has to address the principal and interest of its off-budget borrowings (OBB) amounting to Rs 1,18,955 crore.
Factoring in the OBB and other liabilities serviced from the state budget, the debt-to-Gross State Domestic Product (GSDP) ratio is projected to reach 37.77%, significantly surpassing the prescribed targets.
While the state government has disclosed the guarantees extended to institutions in its budget documents, it has not fully revealed its Off-Budget Borrowings of Rs 1,18,955 crore.
This lack of transparency could further impact the Debt to Gross State Domestic Product ratio, with a substantial portion of the OBB attributed to projects like the Kaleshwaram Irrigation Project Corporation Limited (KIPCL).
