Telangana’s public debt expected to cross ₹5 lakh crore by 2025-26 end

Telangana's public debt to exceed ₹5 lakh crore by 2025-26, with loans from various sources

Telangana’s total public debt outstanding, loans under the Fiscal Responsibility and Budget Management Act provisions, are expected to cross ₹5 lakh crore at the end of next financial year [2025-26]. When debt servicing payment and clearing principal increases, it strains State’s finances.

Key updates from Telangana budget 2025-26 presentation

According to the 2025-26 budget documents, the State’s open market loans are expected to reach ₹4.07 lakh crore at the end of 2025-26, close to ₹50,000 crore higher than the current year’s [2024-25] ₹3.58 lakh crore. The State has made provision for loans from the Central Government loans totalling to ₹23,719 crore and loans from autonomous bodies are pegged at ₹11,202 crore. Special securities, provident fund and others are expected to provide another ₹21,787 crore while the State projected the reserve funds to be of the order of ₹41,048 crore taking the total to ₹5.04 lakh crore.

The public debt outstanding however is within the limits at 28.1% of the GSDP, the government said. It had also classified the outstanding guarantees accounting to ₹3.01 lakh crore into three categories. Accordingly, the government guaranteed loans raised by special purpose vehicles (SPV) and serviced by the government are pegged at ₹1.17 lakh crore and those raised by the SPVs with government guarantee and serviced by them are estimated at ₹1.24 lakh crore.

The quantum of non-guaranteed loans raised by the corporations and serviced by them are put at ₹59,956 crore, according to the document tabled in the assembly on Wednesday (March 19, 2025). The government pegged the debt servicing expenditure for 2025-26 at ₹19,370 crore around ₹2,000 crore higher than the current year’s ₹17,729 crore. However, given the quantum of accumulated debts, the government has been incurring expenditure debt servicing expenditure over and above the budget estimates since past few years.

During 2024-25 for instance, the budget estimates placed interest payment at ₹17,729 crore but it has repaid more than ₹22,000 crore till January end with two more months to go.