Telangana to Raise ₹12,000 Crore via Market Borrowings in Q2 of FY 2025–26
The borrowing schedule includes 11 tranches, starting with ₹1,500 crore each on July 1 and August 12, and ₹1,000 crore on nine additional dates across July, August, and September.
The Telangana government has announced plans to raise ₹12,000 crore through market borrowings during the second quarter (July–September) of the 2025–26 financial year, according to the Reserve Bank of India’s auction calendar for State Development Loans (SDLs).
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The borrowing schedule includes 11 tranches, starting with ₹1,500 crore each on July 1 and August 12, and ₹1,000 crore on nine additional dates across July, August, and September.
Q1 Borrowings Overshoot Estimates
This follows Telangana’s borrowing of ₹17,400 crore in Q1 (April–June)—₹3,400 crore more than the indicative estimate of ₹14,000 crore. With this, the State’s total market borrowings in the first half of the fiscal year are projected to reach ₹29,400 crore, which accounts for 46% of the annual borrowing limit of ₹64,539 crore set for 2025–26.
Revenue Growth Lags Behind
Despite increased borrowing, tax revenues have grown only marginally—by just ₹200 crore during April–May compared to the same period last year. The slow growth in revenue, coupled with rising expenditure on welfare schemes and pending dues, has led to mounting fiscal pressure.
Government: Borrowings Within FRBM Limits
Officials from the State’s Finance Department maintain that the borrowings remain within the limits prescribed by the Fiscal Responsibility and Budget Management (FRBM) Act. They asserted that the borrowed funds are being used judiciously for public welfare programmes and debt clearances.
Experts Warn of Fiscal Strain
However, financial experts have cautioned that the persistent reliance on borrowings, especially when capital expenditure and revenue generation are not growing proportionally, could weaken Telangana’s credit profile.
“The absence of capital expenditure growth to balance these borrowings is a red flag,” said a fiscal analyst.
They warned that investor confidence could be dented, and future borrowing capacity may be constrained if the current trend continues.
Need for Strategic Use of Funds
With frequent bond auctions scheduled in the upcoming quarter, analysts are urging greater oversight to ensure borrowed funds are used for revenue-generating and sustainable development initiatives.
As the State pushes forward with its ambitious welfare commitments, experts underline the importance of tight fiscal discipline to safeguard long-term economic health.
