RBI warns Telangana on rising debt and fiscal deficit

The Reserve Bank of India (RBI) has flagged concerns over Telangana’s fiscal trajectory, warning that the State’s deficit and debt burdens are rising amid slowing revenue growth. 

While the economy remains relatively stable at present, the RBI cautioned that the fiscal situation could become vulnerable if corrective steps are not taken in time.

According to the RBI’s latest State Finances – A Study of Budgets report, Telangana has become increasingly dependent on market borrowings.

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market loans rose from Rs.49,618 crore in 2023-24 to Rs.56,209 crore in 2024-25, highlighting growing reliance on debt to bridge resource gaps. By the end of December in the current fiscal (2025-26), the Congress government raised Rs.66,000 crore through State securities auction.

The central bank observed that although the Union government has extended interest-free loans for capital expenditure, several States, including Telangana, continue to witness rising overall debt levels, partly due to additional borrowings outside regular budgetary channels.