Telangana Approves Settlement Scheme as GHMC Debt Crisis Deepens

Hyderabad — Facing mounting fiscal pressures, the Telangana government has green-lit a one-time settlement (OTS) mechanism aimed at recovering property tax arrears owed by state and central government properties to the city's municipal corporations.

The initiative underscores a dramatic reversal in the financial health of the Greater Hyderabad Municipal Corporation (GHMC), which has transformed from a well-capitalized entity into a debt-laden organization over the past decade. Until 2013, GHMC maintained fixed deposits exceeding Rs. 1,000 crore. Following Telangana's formation, however, these reserves were redirected to other government departments, leaving the civic body financially weakened.

The corporation subsequently transitioned from holding fixed deposits to operating in overdraft. To finance major infrastructure development—particularly elevated highways—GHMC borrowed approximately Rs. 6,000 crore. The total outstanding liability now stands at Rs. 4,717 crore.

Recent discussions had centered on the possibility of the state government absorbing these liabilities. Officials presented loan documentation to the government for consideration. However, state authorities determined that assuming such obligations would breach Telangana's borrowing capacity limits, prompting them to reject this approach.

Instead, the government opted to address the underlying issue by recovering dues owed to municipal bodies. The Cabinet accordingly approved the OTS proposal targeting unpaid property taxes from government properties.

Scale of Government Arrears

Government properties across GHMC, Cyberabad Municipal Corporation (CMC), and MMC jurisdictions have accumulated Rs. 6,375 crore in tax arrears. Of this sum, Rs. 5,864 crore relates to the current 2025-26 financial year alone.

Through the settlement facility, the three corporations are projected to recover approximately Rs. 1,686 crore.

Across all three municipal bodies, total outstanding property tax dues reached Rs. 14,686.6 crore across 28,80,260 assessments as of the latest count. Government facilities account for Rs. 5,864 crore of this total, while private properties represent Rs. 8,734 crore in unpaid taxes.

Despite the substantial arrears, authorities established a collection target of Rs. 2,762 crore. By March 31, 2026, the three corporations had collected Rs. 2,558.80 crore against this goal.

Early Bird Scheme Results

An early bird incentive scheme launched in the previous month generated Rs. 1,211 crore in collections across the three corporations. CMC led the effort with Rs. 510 crore, followed by GHMC at Rs. 441 crore and MMC at Rs. 260 crore.