Lok Sabha Question No. 2401 (UNSTARRED), answered on 2025-08-04
Subject: Restructuring of Debt of Various Corporations/SPVs
Ministry: FINANCE
Asked by: Shri Chamala Kiran Kumar Reddy

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF EXPENDITURE

## LOK SABHA

## UNSTARRED QUESTION NO. 2401

## TO BE ANSWERED ON MONDAY, 4 th  AUGUST, 2025

13 SRAVANA, 1947 (SAKA)

## RESTRUCTURING OF DEBT OF VARIOUS CORPORATIONS/SPVS

## 2401.   Shri Chamala Kiran Kumar Reddy

Will the Minister of Finance be pleased to state:

- (a) the current status of the request from the State Government of Telangana for restructuring of debt of various Corporations/SPVs owned by the State Government;
- (b) whether the Government has issued or is considering to issue appropriate instructions to the relevant financial institutions for the restructuring of these loans;
- (c) if so, the details thereof and if not, the reasons therefor; and
- (d)  the  steps  taken/being  taken  by  the  Government  to  support  States  facing  debt  servicing challenges?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI PANKAJ CHAUDHARY)

- (a) to  (c) A  request  was  received  from  the  State  Government  of  Telangana  regarding restructuring of loans raised by the Special Purpose Vehicles (SPVs) that are serviced from the State Consolidated Fund under Kaleshwaram Lift Irrigation Scheme. As per the information received from Ministry of Power, the State Government of Telangana has been informed that Kaleshwaram Irrigation Project Corporation Limited (KIPCL), a special purpose vehicle (SPV) established to construct the Kaleshwaram Lift Irrigation Project in Telangana, was financed by Power Finance Corporation Limited (PFC Ltd.) and Rural Electrification Corporation (REC) Limited.

These Non-Banking Financial Companies (NBFCs) raise funds from various sources in the domestic and offshore markets. Based on their cost of borrowing, they determine the lending rates, which also depend on the grading of borrower. The REC Limited has already granted a time extension for the completion of works until December, 2024 at the request of KIPCL. Further, it was also informed to the State Government that rebate on interest rate may be considered upon the completion/closure of these projects. However, any change in loan amortization schedule would result in the downgrade of KIPCL's account classification (from standard to Sub-standard) in the books of PFC/REC Ltd.in accordance with the guidelines issued by the Reserve Bank of India.

(d) All  States  including  State  Government  of  Telangana  have  enacted  their  Fiscal Responsibility  and  Budget  Management  (FRBM) Act, which makes the  State Government responsible  to  ensure  prudence  in  fiscal  management  and  fiscal  stability  by  progressive elimination of revenue deficit, reduction in fiscal deficit, prudent debt management consistent with  fiscal  sustainability,  greater  transparency  in  fiscal  operations  of  the  government. Compliance to the Fiscal Responsibility and Budget Management (FRBM) Act is monitored by the State Legislature. The Government of India provides substantial financial support to States through devolution of taxes & duties, grant in aid for Centrally Sponsored Schemes, supports various projects under Central Sector Schemes and provided financial assistance for capital works under the scheme for Special Assistance to States for Capital Investment.

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