Faced with the mounting interest burden of high-cost loans obtained in the past, the Telangana Government has reportedly decided to swap the high-interest loans with low-interest borrowings so as to ensure that it can save significant amounts in the coming days.
The effort can be seen from the fact that the Government has opted for low-interest open market borrowings through the auction of securities conducted by the Reserve Bank of India (RBI) in the past few weeks.
The State Government raised a huge ₹5,000 crore through the auction of securities on August 5, with interest rates pegged around 7.1%. It has raised ₹3,500 crore on July 29 with interest rates of 7.15% to 7.16%, and the same is the case with ₹2,500 crore raised on July 15 with interest rates pegged at 7.1%. Though the tenure of the borrowings is longer, they are likely to come in as a cushion to the Government owing to their low interest rates.
The development follows the huge loans obtained by the BRS Government at high interest rates, which have become a burden on the State Government that is forced to pay interest of around ₹25,000 crore since the last two fiscal years.
Chief Minister A. Revanth Reddy said, during his Independence Day address on Friday, that the Government completed debt servicing of ₹2.2 lakh crore, which included principal of ₹1.32 lakh crore and interest component of ₹88,178 crore since the Congress assumed power less than two years ago, indicating the seriousness of the issue.
