Telangana makes strong pitch for borrowing flexibility and fiscal autonomy to States  

Telangana pushes for borrowing flexibility and fiscal autonomy in Union Budget 2025-26 to meet developmental goals.

As the stage is set for presentation of the Union Budget 2025-26 by Finance Minister Nirmala Sitharaman on Saturday (February 1, 2025), Telangana has made a strong pitch for borrowing flexibility and fiscal autonomy to the States to meet their developmental goals.

The State requested the Central Government to communicate net borrowing ceilings alongside tax devolution figures during the budget presentation. “Removal of conditionalities on borrowings will allow a greater fiscal space,” Telangana Deputy Chief Minister Mallu Bhatti Vikramarka said.

The Deputy Chief Minister, who also holds the Finance portfolio, made a detailed presentation on the State’s specific requirements at the pre-budget meeting convened by the Union Finance Minister last month. He stressed the need for ensuring fair share in Centrally Sponsored Schemes (CSS) to the State and lamented that Telangana has been underfunded when it came to CSS. The State requested that allocations based on population ratio to be disbursed promptly without any bias and wanted greater flexibility in the CSS implementation to address regional specific needs.

The Deputy Chief Minister wanted flexibility in MGNREGA funds utilisation for taking up innovative works that generate employment while creating durable assets. In addition, it is essential to increase allocations under the scheme for tackling rural distress. He wanted the Centre to release ₹1,800 crore pending under backward regions grant fund besides extending the annual ₹450 crore grant for five more years to support backward districts.

Explaining about the climate resilience and sustainability initiatives launched by the State, Mr. Vikramarka requested the Centre to ensure access to green financing mechanisms for sustainable infrastructure projects besides allocation of dedicated central funds to strengthen climate resilience initiatives.

In addition to making a presentation before the Union Finance Minister, the Deputy Chief Minister submitted a memorandum to Union Minister G. Kishan Reddy seeking Central assistance in taking up important projects like phase II of Hyderabad Metro Rail, Musi Riverfront Development Project, Godavari-Musi linking project and sewerage master plan for Hyderabad. Detailing projected cost for each project, the Minister wanted Mr. Kishan Reddy to help the State in securing maximum Central assistance to these projects all estimated at ₹1.63 lakh crore.