Telangana opts for long-term market borrowings to reduce debt burden

Telangana Government, under Chief Minister A. Revanth Reddy, is revamping its borrowing approach to obtain ₹21,000 crore in long-term loans with an interest rate of approximately 7.5%. This change is intended to ease financial pressure from earlier borrowings that saw interest rates soar to 11.5%, paving the way for better fiscal management.

BRIC Team

Jun 29, 2026 · 1 min read · 15 views

Telangana opts for long-term market borrowings to reduce debt burden

Key Takeaways

•The Telangana Government plans to borrow approximately ₹21,000 crore in the second quarter of the 2026-27 financial year.
•Chief Minister A. Revanth Reddy highlighted that past borrowings had interest rates as high as 11.5%.
•The government aims to raise ₹7,000 crore through an auction of securities on June 30, with a settlement date of July 1.
•One proposed loan installment of ₹2,000 crore will have a tenure exceeding 25 years, enhancing repayment flexibility.
•The RBI's new Benchmark Issuance Strategy will improve transparency by issuing securities in specific tenor buckets according to a pre-announced calendar.

Telangana Government is shaking up its borrowing game, opting for long-term loans at lower interest rates to ease financial strain from previous high-interest, short-term loans . Chief Minister A . Revanth Reddy slammed previous administration for financial missteps that saddled state with hefty interest payments. Past loans hit interest rates up to 11.5%,putting a dent in state finances.

Now, the current administration plans to restructure these loans,pursuing market borrowings of about ₹21,000 crore in second quarter of 2026-27 financial year. Most loans will stretch beyond 20 years, making repayment more manageable. Reddy stressed the importance of this change,saying, “We have restructured such loans and are opting for low-interest (around 7.5%) long-tenure loans to sustain finances.”

Part of this strategy includes raising ₹7,000 crore through auction of securities managed by Reserve Bank of India (RBI) on June 30, settling July 1. Among proposed borrowings, ₹2,000 crore will exceed 25-year tenure, while another ₹2,000 crore will be for 16-20 years.

Also,government plans to secure around ₹5,000 crore in borrowings with tenures over 25 years during same quarter. Another ₹5,000 crore will be sought for 16-25 year terms. This aligns with RBI's new Benchmark Issuance Strategy, aiming to boost transparency for investors by issuing securities in specific tenor buckets per a pre-announced calendar.

By focusing on long-term,low-interest loans, Telangana Government looks to ease state's financial burden and ensure more sustainable fiscal management…

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