The Telangana government will be forced to tread cautiously in planning its upcoming budgetary proposals thanks to the “disappointing” Union Budget presented in the Parliament on Sunday.
“Except for railway corridor, nothing specific has been announced for the State,” was how a senior Finance department official reacted to Union Finance Minister Nirmala Sitharaman’s budget. The State has to tread cautiously especially in planning its welfare and developmental schemes as it is unlikely to secure Central assistance for its major projects including the Regional Ring Road, extension of the metro rail (Metro Phase -II) and Musi rejuvenation projects.
The State could leverage its fiscal management policies like swapping the high interest loans with low interest ones which ensured additional loans this fiscal. The Union Finance Ministry, which reduced the quantum of borrowing from over ₹64,369 crore of the budget estimates of 2025-26 to ₹54,009 crore initially, had allowed the State to raise ₹71,400 crore subsequently after the State swapped high interest loan of the Rural Electrification Corporation.
But the scope for raising borrowings this year is likely to be limited as the cap on fiscal deficit continues to be at 3 per cent. Interestingly, the Central Government has decided to keep its fiscal deficit limit at 4.5 per cent for the next fiscal while not conceding the request of the States to enhance their limits allowing more freedom for borrowing.
Finance officials are tight-lipped when asked about the impact of the budget on the State economy, but admitted that the government should tread cautiously in exploring sources of revenue to meet its immediate commitments without exceeding the limit set for the fiscal deficit in the Fiscal Responsibility and Budget Management (FRBM) Act.
Published – February 01, 2026 08:23 pm IST
