Telangana’s off-budget debt reached ₹1,20,944 crore at the end of 2023-24, equivalent to around 9% of its gross state domestic product, according to a World Bank report that has also identified inconsistencies in how such liabilities are disclosed. The figure places the state among those with the highest off-budget liabilities covered in the report and raises a larger governance question: how much of a state’s effective borrowing burden is visible in its formal budget documents?
The report, titled ‘A Study of Off-Budget Borrowings in India for the 16th Finance Commission’, examines borrowing undertaken through state-owned entities and special-purpose vehicles. These arrangements can support public spending without appearing immediately as direct borrowing by the state government. Repayment, however, may still depend on government grants, guarantees, future revenues or direct financial assistance for servicing the debt.
That distinction matters because state budgets are the primary documents through which legislatures and citizens assess revenue, expenditure, borrowing and fiscal priorities. When liabilities are raised by government-controlled entities, the headline budget numbers may not capture the full set of obligations connected to public programmes, infrastructure or other state-backed activities. The World Bank’s recommendations are therefore focused not only on reporting more information, but on making the information comparable and traceable across states and years.
The report said Telangana raised ₹2,303 crore through off-budget borrowings during 2023-24. Its outstanding liabilities increased from ₹97,940 crore in 2020-21 to ₹1,18,955 crore in 2021-22. They stood at ₹1,18,629 crore in 2022-23 before rising to ₹1,20,944 crore in 2023-24. Over the same period, Telangana’s GSDP for 2023-24 was reported at ₹13,61,395 crore.
The trajectory shows that the issue is not limited to a single year’s borrowing decision. The outstanding liability remained above ₹1 lakh crore throughout the period covered in the report and grew by nearly ₹23,000 crore between 2020-21 and 2023-24. The supplied findings do not establish how much of the increase was driven by fresh borrowing, accumulated interest, refinancing, changes in reporting or other factors. That missing breakdown is itself relevant to the transparency question raised by the report.
One discrepancy identified by the World Bank concerns six Telangana state entities that had earlier reported borrowings on behalf of the government. Those entities showed nil off-budget liabilities in 2022, even though the government provided guarantees worth ₹35,667 crore and direct government loans of ₹3,916 crore for debt servicing. The contrast between the reported liability position and the public support extended for repayment illustrates why entity-level disclosure is important.
The report also referred to data from 12 state public sector enterprises in 2020. Their borrowings stood at ₹85,380 crore, while outstanding government guarantees were ₹70,688 crore. However, only the lower guarantee figure was considered as off-budget borrowing. The difference between the two figures indicates how the definition and measurement of off-budget liabilities can materially affect the number presented to the public.
The Comptroller and Auditor General adopted the latest available figure of ₹32,351 crore as Telangana’s reported off-budget borrowings, according to the report cited by The Times of India. This figure differs significantly from the World Bank’s estimate of total outstanding off-budget liabilities for 2023-24. The comparison does not by itself explain why the figures differ, but it demonstrates the consequences of inconsistent reporting frameworks and data availability.
The institutional structure behind these borrowings is central to understanding the problem. A state government may use an entity or special-purpose vehicle to raise funds for a public purpose, while supporting repayment through guarantees, grants or loans. The borrowing may therefore remain linked to the government’s fiscal position even if it is not recorded as a conventional state loan at the point of raising funds. Without a complete statement of the relationship between the entity and the government, readers may not be able to determine the extent of public exposure.
This is particularly significant for infrastructure and public service financing. State-owned entities can be used to mobilise funds for projects or programmes, but repayment obligations eventually interact with the government’s available revenues and expenditure choices. When guarantees are invoked or direct support is required for debt servicing, the liability can return to the state budget in another form. The supplied report does not identify individual Telangana projects linked to the borrowings, so it cannot establish which sectors or assets account for the liabilities.
Telangana is not an isolated case. Andhra Pradesh reported outstanding off-budget liabilities of ₹1,40,470 crore at the end of 2023-24, equivalent to 11% of its GSDP of ₹12,91,518 crore. The World Bank report identified Andhra Pradesh and Telangana as having the highest liabilities among the states covered. Kerala reported ₹32,942 crore, or 3% of its GSDP, while Karnataka reported ₹13,478 crore, equivalent to 1%. Maharashtra’s liabilities stood at ₹10,135 crore.
These comparisons show two separate dimensions of fiscal exposure. The absolute amount indicates the scale of obligations that may require repayment or government support. The ratio to GSDP provides a measure of the burden relative to the size of the state economy. Telangana’s 9% ratio is lower than Andhra Pradesh’s 11% but substantially higher than the ratios reported for Kerala and Karnataka. The figures also show why comparable definitions matter: differences in what is counted can alter both state rankings and assessments of fiscal risk.
The World Bank has recommended a standardised annual disclosure system, preferably as part of state budgets. It has proposed entity-wise details covering outstanding borrowings, fresh loans, repayments, interest payments and government assistance for debt servicing. Such a system would allow lawmakers and the public to follow the complete life cycle of a liability rather than seeing only a guarantee, a loan or a final outstanding figure in isolation.
The report has also recommended that the CAG incorporate these disclosures into the State Finance Accounts. This would place off-budget borrowings within a formal accounting and audit framework and could improve the consistency of information available across states. It would also make it easier to distinguish between the amount borrowed by an entity, the amount guaranteed by the government, the amount directly funded by the government and the amount ultimately exposed to public repayment.
The evidence supplied in the report establishes the scale of Telangana’s reported off-budget liabilities and identifies several disclosure inconsistencies. It does not establish that any borrowing was unlawful, nor does it assess the performance or public value of the projects or programmes financed through these arrangements. It also does not provide an entity-wise account of the current liabilities, repayment schedules or interest costs.
That is why the main urban and governance question is not simply whether Telangana borrowed ₹1.21 lakh crore outside its direct budget. It is whether citizens, legislators and auditors can clearly see which public entities borrowed the money, what government support has been committed, how much has been repaid and what future revenues are tied to those obligations. Until those elements are reported consistently, the formal state budget may provide only a partial picture of the resources available for public services and infrastructure.
The World Bank’s proposed disclosure framework offers a defined next step: annual, entity-wise reporting linked to state budgets and the CAG’s State Finance Accounts. The key developments to monitor are whether such disclosures are standardised, whether the different figures can be reconciled and whether Telangana’s future budget documents show the full borrowing, guarantee, repayment and debt-servicing position of its state-owned entities.
