Prime Minister appeals requested for assistance in restructuring a massive ₹2 lakh crore in loans for Telangana state.
Telangana's Loan Restructuring Drive: A Critical Step Towards Fiscal Relief
Telangana, one of India's southern states, is in the midst of a significant financial restructuring drive. Led by Chief Minister A. Revanth Reddy, the state government has formally requested the Centre to restructure its massive ₹2 lakh crore loan, inherited from the previous government.
So far, the state has achieved remarkable success in loan restructuring. Approximately ₹26,000 crore of loans have been restructured at a lower interest rate of 7.5% with extended tenures of around 35 years. This move has provided significant fiscal relief, offering a much-needed breather from the burden of high-interest debt.
The Centre and the Reserve Bank of India (RBI) have already approved and facilitated the restructuring of loans worth approximately ₹25,000 crore. This includes high-interest loans from the Rural Electrification Corporation (REC) that carried steep interest rates of around 11% and 10-year repayment terms. The adjustment has shifted these loans to lower interest rates (7%-7.5%) and longer repayment periods (25-30 years). This change is expected to save the Telangana government around ₹2,000 crore annually and ease its debt servicing burden.
However, the appeal to restructure the entire ₹2 lakh crore remains pending with the Union Government. The Chief Minister has repeatedly urged the Centre for a comprehensive restructuring package covering the remaining large debt, aiming to reduce the state's interest burden and unlock resources for welfare and development. As of mid-August 2025, the request is under consideration, with Telangana seeking central support to manage this "severe economic crisis" arising from legacy high-interest borrowings.
This loan restructuring drive is critical for Telangana to reduce its fiscal stress accrued due to past high-cost borrowing practices. The success of this drive could pave the way for a more stable financial future for the state.
In other news, the Prime Minister's blueprint for economic reforms includes GST2.0, an employment scheme, deepwater exploration, and desi jet engines. Meanwhile, the Telangana Chief Minister has spoken about the state's infrastructure, mentioning that the state only has one airport, while neighboring Andhra Pradesh has 3-4 airports. He also stated that the Congress could secure permissions for two more airports at Warangal and Adilabad.
The Telangana Chief Minister has defended his frequent trips to New Delhi, stating they were to obtain clearances for infrastructure projects such as the Metro expansion and the Regional Ring Road. Additionally, notable figures like Satya Nadella, Shantanu, Banga, and Watsa have donated ₹300 crore for HPS.
This article was published on August 15, 2025. The future of Telangana's financial landscape remains uncertain, but the current restructuring drive offers a glimmer of hope for the state's economic recovery.
- The restructuring drive in Telangana, led by Chief Minister A. Revanth Reddy and aimed at providing fiscal relief, has already resulted in the reduction of interest rates and extension of tenures for loans worth approximately ₹51,000 crore.
- The remaining ₹1.49 lakh crore of loans is still under consideration for restructuring by the Centre, as the Telangana government continues to advocate for a comprehensive restructuring package to ease its debt servicing burden.
- The success of this loan restructuring drive is significant not just for Telangana's finance, but also for its general news, as the state's Chief Minister has emphasized the need for additional infrastructure, such as airports, to boost the region's economic growth.
- The Prime Minister's economic reform blueprint includes various initiatives; one such initiative involves the promotion of domestic businesses, as evidenced by donations made by notable figures like Satya Nadella, Shantanu, Banga, and Watsa, amounting to ₹300 crore for HPS.
