Repayment of principal, interest of old debts weighs heavily on Telangana
Telangana's debt burden rises as DA instalments and loan repayments strain the exchequer, with heavy annual servicing and new costs.
Payment of two instalments of Dearness Allowance from October salary to add to the burden
Updated - October 29, 2026 05:52 pm IST - HYDERABAD
Telangana government should repay over ₹22,315 crore during the current financial year, as per budget estimates | Photo Credit: M VENKAT RAO
Debt servicing continues to weigh heavily on the State exchequer as the Telangana Government braces for additional expenditure due to the release of two instalments of dearness allowance (DA) to its employees across different cadres.
Additional expenditure of ₹3,057 crore per annum for DAs and arrears
The State Government has to incur an additional ₹3,057 crore in annual expenditure for the two instalments of DA and arrears pending for the past few years. This would add expenditure of ₹250 crore a month to the exchequer, which is already spending around ₹3,500 crore monthly towards payment of salaries and wages.
The State, meanwhile, continues to incur heavy expenditure for debt servicing, repayment of principal and interest of the loans obtained in the past. According to the budget estimates, the government should repay over ₹22,315 crore during the current financial year, constituting market borrowings ₹19,785 crore, followed by loans to NABARD of ₹1,047 crore in addition to repayment of ₹892 crore on compensation and bonds issued by the government from time to time.
The loan quantum remains equally heavy during the next financial year 2027-28, when the government will have to repay ₹19,502 crore, according to the maturity profile of the internal debt in the form of borrowings and other liabilities. Expenditure of ₹892 crore on account of maturing bonds would continue till 2031-32; the whole repayment of loans obtained from the NABARD will also continue till the same time.
The maturity profile of the internal debt indicated in the Finance Accounts report released by the Comptroller and Auditor General of India recently indicates the pressure on the State’s finances to repay the borrowings by the previous government. Since the commitment has been increasing due to debt servicing and commitments given by the government, it had opted for “ever greening” of the existing loans, repayment of the maturing loans with fresh ones.
This could be seen from the fact that the State’s net borrowings at the end of August are pegged at ₹25,900 crore, while gross borrowings were ₹36,900 crore, indicating it had spent around ₹11,000 crore towards debt servicing commitments.
Interestingly, the CAG, in its State Finance Audit Report earlier, found fault with the Bharat Rashtra Samithi (BRS)-led State government for indulging in borrowings to repay the old loans. The Congress government is, however, ensuring that a significant portion of loans obtained are spent on capital works, as could be seen from the expenditure incurred during the first half of the current fiscal. The government had made capital expenditure of ₹27,742 crore by September end, achieving 58.69% of the ₹47,267 crore budgeted for the current fiscal.
Published - October 29, 2026 05:51 pm IST
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