RBI allows Telangana to raise FRBM loans

Hyderabad: Following chief minister K Chandrashekhar Rao’s (KCR) demand of lifting the economic ban on the state , the Reserve Bank of India on Friday allowed the state to opt for Rs 4,000 crore open market borrowings (OMB).

Telangana will be allowed to borrow the sum of money by auctioning the state properties on or before June 7. Following a two-month long standoff, the ministry of finance has conceded, allowing the state to raise funds under Fiscal Responsibility and Budget Management Act (FRBM) this year.

Telangana has decided to raise FRMB loans worth Rs 53,000 crore for this year, however the Centre may impose a 20 percent cut on borrowing. This will mean that the state will be allowed to borrow Rs 43,000 crore only.

“The Ministry of Finance permitted raising the loans. However, the quantum of loan to be raised by the state for the entire financial year of 2022-23 will be known next week” an official of the finance ministry was quoted as sayin by The New Indian Express

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Earlier, Telangana State finance Secretary K Ramakrishna Rao, was on a five-day visit to New Delhi . Rao put forth the state government’s demands regarding the open market borrowing. The argument seems to have convinced the ministry.

The seriousness of the issue could be understood by the fact that Telangana was wiling to approach the Supreme Court, seeking revocation of the ban. Anticipating the state’s victory in the apex court, center has allowed Telangana to go for open market borrowing.

Earlier in the month of May , Centre decided to stop the FRBM for Telangana, which prevented the state from open market borrowing.