Hyderabad: The state government is set to save around ₹1,000 crore annually through an ongoing loan-swapping exercise aimed at reducing the mounting debt burden. Launched in August 2025 by the Congress government, the initiative focuses on replacing high-interest loans borrowed during the previous BRS regime, with fresh borrowings at substantially lower interest rates.
Official sources said that the government had sought approval to swap an additional ₹25,000 crore of loans during the current financial year. The earlier loans of the BRS government tenure carried interest rates of up to 11 per cent, while the refinanced borrowings are being secured at rates ranging between 7 and 7.5 per cent. This reduction of 3 to 3.5 percentage points in interest is expected to yield annual savings of about ₹1,000 crore in debt servicing, sources added.
As part of the strategy, the government plans to raise another ₹12,000 crore over the next two months — May and June — which will be utilised for further loan swapping. The move is part of the financial restructuring effort to reduce the state’s debt burden.
Following repeated representations by Chief Minister A. Revanth Reddy, the Centre had, in August 2025, approved the rescheduling of ₹26,000 crore worth of high-cost loans through the Reserve Bank of India at significantly reduced interest rates. This restructuring has already helped lower the state’s debt servicing burden and provided much-needed fiscal relief.
The Chief Minister has also appealed to Prime Minister Narendra Modi to extend further support by restructuring loans amounting to nearly ₹2 lakh crore in a phased manner. The CM highlighted the severity of the state’s financial situation, pointing to an overall outstanding debt of approximately ₹2.74 lakh crore, which he attributed to borrowings by the previous BRS government.
Under the loan-swapping strategy, the government is targeting high-cost debt, including borrowings through special purpose vehicles (SPVs) such as the Kaleshwaram project and various corporate loans. These are being replaced with lower-cost, long-term bonds with repayment tenures ranging from 13 to 28 years, thereby easing immediate cash flow pressures in the 2026–27 financial year.
As per CM’s directions, the finance department, has made progress in restructuring liabilities worth about ₹26,103 crore in previous fiscal 2025-26, contributing to reduced interest burden.
Speaking in the Legislative Assembly during recent Budget session, Revanth Reddy had said, “To overcome the financial crisis, I persuaded the Centre and financial institutions to restructure ₹26,000 crore of loans at an interest rate of 7.5 per cent for a tenure of 35 years,” he said.
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