TS to strike deal with banks on clearing debts after 2019

The state government is reworking agreements with banks and financial institutions on repayment of debt and interest after two years, when its term ends in 2019.

The government has been tying up with consortiums of various banks and financial institutions to secure loans for Mission Bhagiratha, 2BHK housing scheme, urban infrastructure projects etc., over the past two years.

Earlier, the government entered into agreements with banks to repay the principal and interest on loans in instalments every quarter from the very first year of disbursal of the loan.

However, the government is now looking to rework these agreements, urging the banks to impose a moratorium of two years since the day of disbursal of loans for repayment.

This clause was included for the loans secured for Mission Bhagiratha recently.

The same is being sought for other loans.

This would mean that the government would start repayment in 2019, when its term will come to an end.

Any government that assumes office after the 2019 elections would face the heat of repayment in its very first year.

Last year, the government had to spend over `6,000 crore to service loans. This year, the figure has increased to `10,000 crore.

“Since Assembly elections are just two years away, the government wants to minimise the debt burden by postponing repayment by two years. This is to ensure that there are no major financial constraints to implement welfare and populist schemes in the last two years of its term,” said sources in the finance department.