RBI allows Telangana to go in for open market borrowings

HYDERABAD: A day after Chief Minister K Chandrasekhar Rao demanded that the Centre should lift “economic sanctions” it has imposed on the State, the Reserve Bank of India (RBI) on Friday allowed the State government to go in for Rs 4,000 crore open market borrowings (OMB) by auctioning government securities to be conducted on June 7.

After a two-month-long fight by the State government, the Ministry of Finance has finally relented and allowed the State to raise loans under the Fiscal Responsibility and Budget Management Act (FRBM) this year.“The Ministry of Finance allowed raising the loans. But, the quantum of loan to be raised by the State for the entire financial year of 2022-23 will be known next week,” sources in Finance Department said. The State planned to raise Rs 53,000 crore FRBM loans this financial year.

According to sources, the Centre may impose 20 per cent cut on the estimated borrowings and may allow the State to raise a Rs 43,000 crore loan this year. “The clarity on the total open market borrowings will only emerge in the next week,” the official sources said.

It may be recalled that special chief secretary (Finance) K Ramakrishna Rao, during his recent five-day visit to Delhi presented the State government’s arguments which seemed to have convinced the Ministry of Finance officials. The State government even thought of knocking the doors of the Supreme Court, if the Ministry of Finance refused to allow the State to raise the loans. However, the Ministry of Finance officials felt that if Telangana went to the apex court, chances are that it could win the case. That was why, the Finance Ministry finally allowed the State to raise the loans, sources said.

The State planned to raise Rs 15,000 crore in the first quarter of this year. Once, the annual loan eligibility is finalised by the Centre, then the State could raise the pending loans too. With this, the State government may not face any problem in implementing Rythu Bandhu for Kharif. The State government has already released money for the payment of salaries to government employees.

Fin Min finally relents

After a two-month-long fight by the State government, the Ministry of Finance has finally relented and allowed the State to raise FRBM loans

Centre may impose 20% cut on the estimated borrowings and may allow the State to raise a Rs 43,000 crore loan

The State plans to raise Rs 53,000 crore FRBM loans this financial year