The Telangana government has launched a major financial restructuring initiative aimed at reducing its rising debt burden, with expected annual savings of nearly Rs 1,000 crore. The programme, initiated in August 2025 under the leadership of Chief Minister A. Revanth Reddy, focuses on replacing high-interest loans taken during the previous administration with fresh borrowings at significantly lower rates.
Officials said loans earlier contracted at interest rates as high as 11 percent are now being refinanced at 7 to 7.5 percent. This shift is expected to substantially reduce the state’s debt servicing costs and improve fiscal stability. As part of the plan, the government has also sought approval to restructure an additional Rs 25,000 crore worth of loans in the current financial year.
To continue the refinancing exercise, Telangana plans to mobilize another Rs 12,000 crore during May and June. Earlier, following repeated requests from the Chief Minister, the Centre allowed restructuring of Rs 26,000 crore through the Reserve Bank of India at more favourable rates, providing partial relief to state finances.
The Chief Minister has urged Prime Minister Narendra Modi to support phased restructuring of nearly Rs 2 lakh crore in loans, noting that the state’s total outstanding debt stands at around Rs 2.74 lakh crore.
Officials added that the government is prioritizing high-cost liabilities linked to major projects and special purpose vehicles, replacing them with long-term bonds with repayment periods of up to 28 years. This strategy is expected to ease financial pressure in the coming years.
