Hyderabad: Telangana has narrowly escaped a major financial setback by paying Rs.1,393 crore in overdue loans just before the deadline, saving two key irrigation agencies from being labeled as defaulters. Two State-backed special purpose vehicles (SPVs), the Telangana State Water Resources Infrastructure Development Corporation Ltd (TSWRIDCL) and Kaleshwaram Irrigation Project Corporation Ltd (KIPCL), cleared Rs 1,393 crore in overdue loans owed to the Rural Electrification Corporation (REC) Ltd by June 30, averting their classification as Non-Performing Assets (NPAs). The repayment, comprising Rs 503 crore from TSWRIDCL and Rs 890 crore from KIPCL, prevented a potential downgrade to Telangana’s financial rating. However, the loans will remain under Special Mention Account – 2 (SMA-2) status due to prior delays. The crisis was flagged by the REC in a letter to Telangana’s Irrigation Secretary Rahul Bojja in June, highlighting overdue payments that had crossed the 60-day threshold and were nearing the RBI’s 90-day NPA limit. The loans are part of the Rs 27,787 crore borrowed by the SPVs for irrigation projects like Kaleshwaram, Palamuru-Ranga Reddy and Sitarama, secured against State guarantees. During the BRS regime, these SPVs were instrumental in addressing Telangana’s historical water scarcity, a pressing issue for the newly formed State in 2014. Projects like Kaleshwaram, one of the world’s largest lift irrigation schemes, brought water to parched regions, irrigating millions of acres in districts like Medak, Nizamabad and Karimnagar. By 2023, the State’s irrigated area had expanded significantly, with Kaleshwaram alone supporting over 19 lakh acres, boosting agricultural productivity and farmer incomes. Under BRS leadership, the government prioritized prompt repayments to maintain lender confidence, particularly in the early years. Between 2016 and 2020, TSWRIDCL and KIPCL consistently met debt obligations, with annual repayments of Rs 2,500–3,000 crore to REC and Power Finance Corporation (PFC). In the later phase after the Congress party took over the reins of the state in December 2023, poor fiscal management added to the repayment strain. Earlier, dues amounting to Rs 1,009 crore were cleared only after the lender intervened in August–September 2024. The REC imposed penal interest in November 2024 for delays of 73–85 days.