The Telangana government will be forced to tread carefully in planning its upcoming budget proposals thanks to the “disappointing” Union Budget tabled in Parliament on Sunday.
“Apart from the rail corridor, nothing concrete has been announced for the state,” said a senior finance department official reacting to Union Finance Minister Nirmala Sitharaman’s budget. The state needs to tread cautiously especially in planning its welfare and development programs as it is unlikely to secure central assistance for its major projects, including the regional ring road, metro extension (Phase – II) and Musi rejuvenation projects.
The state could use its fiscal management policies, such as exchanging high-interest loans for low-interest loans, which ensured additional borrowing in that fiscal amount. The Union Finance Ministry, which reduced borrowing from over ₹64,369 crore from the 2025–26 budget estimates to ₹54,009 crore initially, allowed the state to raise ₹71,400 crore subsequently after the state swapped a high-interest loan to the Rural Electrification Corporation.
But room for increased borrowing this year is likely to be limited as the fiscal deficit ceiling remains at 3 percent. Interestingly, the central government has decided to keep its fiscal deficit limit at 4.5 percent for the next fiscal, without accepting the demand of states to raise their limits to allow more freedom for borrowing.
Finance officials are tight-lipped when asked about the impact of the budget on the state’s economy, but conceded that the government should proceed cautiously in exploring revenue sources to meet its immediate obligations without going over the limit set for fiscal deficit in the Fiscal Responsibility and Budget Management (FRBM) Act.
Published – 01 Feb 2026 20:23 IST
