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

The public debt of Telangana by the end of 2025-26 is expected to be more than the 2024-25. The image is used for representative purposes only.
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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

Various sources of loans

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.

Debt servicing ₹2,000 crore higher than 2024-25

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.

Interest payment exceeded estimates

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.