A major drawback for Telangana, the Reserve Bank of India (RBI) declined permission to seek borrowing through security bonds.  

On the 27th of May, Friday, the RBI released a list of 11 states including Andhra Pradesh, Gujarat, Haryana, Tamil Nadu, and West Bengal which have been permitted to auction their security bonds and borrow money from financial institutions.  However, the Telugu State of Telangana has been denied permission and dropped off the list.  Meanwhile, on the 31st of May, the 11 permitted states would raise approximately Rs. 21,000 crores from borrowings.

According to the Telangana Government officials, the RBI has stopped Telangana from seeking loans from April, the first month of the new financial year 2022-2023.  With the permission denied in June too, this would be the third month when the Telangana Rashtra Samithi (TRS) Government would face a financial crunch in 2022-2023.

It is to be noted, that the K. Chandrashekar Rao Government was expecting Rs. 4,000 crore in June through borrowings, which would now have to be managed from the yearly budget. In the past two months, April and May, the Telangana Government expected to raise approximately Rs. 11,000 crore.

Furthermore, disappointed with the RBI decision, the TRS Government objective the move and called it a political way of the Central Government ruled by the Bharatiya Janata Party (BJP.)

In addition, due to the denial of Fiscal Responsibility and Budget Management Loan through open market borrowings, the Telangana Government needs to arrange money for schemes in Telangana.

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