HYDERABAD: The State government is likely to use the option given by the Reserve Bank of India (RBI) and go for rescheduling of all its existing debts. Thus, the total loans of the State government will be rescheduled so that the debt service burden on the State would decrease considerably.
In his reply to the debate on the vote-on-account budget in the State Assembly on Saturday, Chief Minister K Chandrasekhar Rao refuted the allegations of Congress that the State was in huge debts.
Rao clarified that the RBI recently gave an opportunity to the States to reschedule loans. “I have asked the officials of the finance department to work out on this. The five or ten-year tenure loans can be rescheduled to 15 or 20-year loans so that the amount spent on debt service will be decreased. The amount saved will be spent on capital expenditure,” the Chief Minister explained.
He said that the Telangana debts were within the limits of the Fiscal Responsibility and Budget Management (FRBM) Act and never defaulted in repaying the loans. The loans raised by the State government were being spent on capital expenditure like the construction of Kaleshwaram irrigation project. There was a difference between private debts and public debts. The government was raising loans only for the capital expenditure, he said.
“In the next five years, we are going to take up debt service of Rs 2.27 lakh crore to Rs 2.30 lakh crore. By repaying this amount, the State will get eligibility to raise another Rs 1.18 lakh crore fresh loans,” the Chief Minister said. The bankers were competing with each other in buying the bonds of Telangana in the open market.
“Because of our financial prudence, the bankers competed with each other to buy our 20 to 25-year bonds,” Rao said. He recalled that Japan raised 300 pc loans against its GDP.