Telangana mulls shifting from short loans to long-term to reduce interest burden

The minister urged the AIIB representatives to apply these loans to ongoing projects to ensure their timely completion.
Minister N Uttam Kumar Reddy with AIIB representatives at Jal Soudha on Tuesday
Minister N Uttam Kumar Reddy with AIIB representatives at Jal Soudha on TuesdayPhoto | Express
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HYDERABAD: The state government is considering shifting from the present high-cost short term loans to low-cost long-term soft loans with longer moratoriums to reduce the financial burden on the irrigation sector.

Currently, the state is grappling with the high cost of short-term loans, which are putting pressure on the treasury. By opting for long-term loans, the government aims to ease the burden of EMI repayments and reduce interest costs. Irrigation Minister N Uttam Kumar Reddy has also requested a moratorium of five years on irrigation loans from Asian Infrastructure Investment Bank (AIIB).

The minister held a meeting with representatives of the AIIB at Jal Soudha here on Tuesday which was attended by key officials, including the Irrigation department adviser Adityanath Das, Secretary Rahul Bojja, Special Secretary Prashant Jeevan Patil, Chief Engineers Anil Kumar and Nagender Rao and AIIB representatives Sangma Kim and Rajesh Yadav.

During the meeting, Uttam pointed out that shifting from short-term to long-term loans would not only reduce the financial strain on the state but also offer flexibility in interest payments. He stated that this move would help expedite the completion of pending irrigation projects, thereby enabling the creation of new ayacut areas. The minister urged the AIIB representatives to apply these loans to ongoing projects to ensure their timely completion.

He also directed officials to prioritise using these loans to complete projects in underdeveloped, backward, tribal and fluoride-hit areas, such as Mulugu, Mahbubnagar and Nalgonda districts. He highlighted that the long-term loans could also benefit ongoing projects in backward regions and those under construction projects such as Palamuru-Rangareddy, Dindi and others.

Uttam expressed optimism that utilising long-term loans would fast-track the development of the state’s irrigation infrastructure. He instructed the irrigation secretary to arrange a follow-up meeting between AIIB representatives and the finance secretary to conduct a detailed feasibility study.

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