This story is from January 21, 2021

Repayment of borrowings not a worry for Telangana

The repayment of securities (market borrowing) is not a major concern for the state government as it gets into the final stage of budget preparation.
Repayment of borrowings not a worry for Telangana
Picture used for representational purpose only
HYDERABAD: The repayment of securities (market borrowing) is not a major concern for the state government as it gets into the final stage of budget preparation.
Though the central government allowed additional and conditional borrowing, the repayment schedule is not at all a burden for the state. According to the Reserve Bank of India’s (RBI) state finance report, 56% of outstanding liabilities have to be paid after seven years, another 18.5% is to be paid only after five years.
The rest of the outstanding liabilities need not be paid before five years.
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Meanwhile, 13.4% should be paid in three to five years.
The TRS government has adopted the policy of taking loans with a longer repayment schedule of about eight to 20 years and the interest rate for such loans is low. Only three per cent of the outstanding loan burden will be carried to the next financial year. This year about Rs 50,000 crore has been borrowed by the state.
An official of the state finance department said that the loan burden was never an issue for Telangana. “Our idea is to ensure that more funds are pumped into the market as the
economy will bounce back. The Covid-19 situation is only a temporary setback,” the officer said.
Experts say that this is good for the state economy. “In this scenario, the state government need not worry about repayment of loans. This reduces the burden on the exchequer. The government can use the funds to fight the pandemic situation,” said K Narsimha Murty, banking expert and independent director, board of National Stock Exchange.
“On the flip side, the next government will have to bear the burden due to the poll promises made by their predecessors,” he added.
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