Telangana's Fiscal Burden: A Worrying Future

The Telangana government faces a massive debt repayment obligation of over Rs 2.67 lakh crore by FY33, per the CAG's report. This includes market borrowings and liabilities from institutions like NSSF and LIC. The state's Debt to GSDP ratio exceeds the set target, indicating substantial fiscal pressure.

The Telangana government is grappling with a staggering debt burden, obligated to repay over Rs 2.67 lakh crore in market loans by FY33, according to the Comptroller and Auditor General (CAG) report released Friday. This fiscal challenge comes despite an average 15.09% growth in the state's Gross State Domestic Product (GSDP), rising from Rs 8.60 lakh crore in 2018-19 to Rs 13.13 lakh crore in 2022-23.

The report, tabled in the state legislature, highlights not only market borrowings but also additional liabilities amounting to Rs 19,210 crore from financial institutions such as the National Small Saving Fund and the Life Insurance Corporation of India, due over the next nine years.

These figures underscore the fiscal pressure mounting on the state, as it must mobilize a substantial Rs 2.86 lakh crore by 2032-33 for public debt servicing. Factoring in off-Budget borrowings, Telangana's debt to GSDP ratio stands at 35.64%, significantly overshooting the 25% target set by the Telangana State FRBM Act. The CAG's findings have raised alarms about the long-term sustainability of the state's finances.