Telangana prefers long tenure market borrowings at relatively lower interest rates to alleviate debt burden

The Telangana Government is preferring long term market borrowings at low-interest rates rather than lower-tenure, high-interest loans burdening the State finances.

The government has been struggling to manage its finances, thanks to the high-interest, low-tenure borrowings by the previous government which imposed huge burden in the form of interest payments on the State exchequer.

“They (the BRS Government) resorted to short term borrowings with interest rates as high as 11.5% in the past imposing a huge burden on the State finances. We have restructured such loans and are opting for low-interest (around 7.5%) long-tenure loans to sustain finances,” Chief Minister A. Revanth Reddy said at a recent public meeting.

Accordingly, the State had decided to go for open market borrowings of around ₹21,000 crore in the second quarter of the current financial year (2026-27). A majority of the borrowings are of the tenure of around 20 years and more. The government proposed to raise ₹7,000 crore during the auction of securities conducted by the Reserve Bank of India (RBI) on June 30 with July 1 as settlement date. Of these, one installment of ₹2,000 crore has tenure of above 25 years and another ₹2,000 crore is being raised with a tenure of 16 to 20 years.

Similarly, the government will raise around ₹5,000 crore borrowings with tenure of over 25 years in the second quarter and it has decided to opt for tenures ranging from 16 to 25 years for an equal amount during the quarter. The auctions would be conducted on the Benchmark Issuance Strategy introduced by the RBI on pilot basis for nine States including Telangana since the first quarter for providing transparency and greater transparency to the investors. The strategy involved issue of securities in specific benchmark tenor buckets as per the pre-announced calendar.