Telangana seeks ₹5,000 crore from Centre under SASCI scheme
Synopsis
Telangana is pressing the Centre for ₹5,000 crore under SASCI and a special FRBM exemption for its ₹30,000 crore residential schools programme — making a demographic argument that over 84% of its population belongs to backward, SC, or ST communities. The dual ask signals how states are increasingly using Central fiscal windows to fund welfare-linked capital spending.
Key Takeaways
Deputy CM Mallu Bhatti Vikramarka met Finance Minister Nirmala Sitharaman in New Delhi on 20 May to seek ₹5,000 crore under SASCI.
Telangana also renewed its appeal for FRBM exemption for Externally Aided Projects tied to the Young India Integrated Residential Schools (YIIRS) programme.
The YIIRS initiative carries a total outlay of ₹30,000 crore , aimed at education and nutrition for students from marginalised communities.
According to SEEPEC data , 56.33% of Telangana's population belongs to Backward Classes, 17.43% to Scheduled Castes, and 10.45% to Scheduled Tribes.
A similar request was first made to Sitharaman in September last year ; a formal Centre response is still awaited.
Telangana has formally requested ₹5,000 crore in additional special financial assistance from the Centre under the Scheme for Special Assistance to States for Capital Investment (SASCI), as the state pushes to accelerate capital expenditure across education, healthcare, and rural infrastructure. The request was made during a high-level meeting in New Delhi on Wednesday, 20 May.
The Meeting and What Was Sought
Telangana Deputy Chief Minister Mallu Bhatti Vikramarka, who also holds the state finance portfolio, met Union Finance Minister Nirmala Sitharaman in New Delhi to press the case for the additional allocation. According to an official release, Vikramarka sought sanction of the ₹5,000 crore assistance specifically under SASCI, a Central scheme designed to encourage states to step up capital investment.
The Deputy CM briefed Sitharaman on the scale of welfare programmes and infrastructure projects currently underway in Telangana, spanning education, healthcare, rural development, and human resource capacity building.
FRBM Exemption for Education Push
A significant part of the discussion centred on the state's flagship Young India Integrated Residential Schools (YIIRS) programme — a ₹30,000 crore initiative aimed at providing quality education and nutritious meals to students from marginalised communities. Vikramarka appealed for an exemption from Fiscal Responsibility and Budget Management (FRBM) borrowing limits for Externally Aided Projects (EAPs) approved by the Department of Economic Affairs (DEA).
This is not the first time Telangana has raised the issue. During a meeting with Sitharaman in September last year, a delegation led by Vikramarka — which included Agriculture Minister Tummala Nageswara Rao — had formally submitted a representation seeking the same FRBM exemption for the YIIRS programme. The state government has consistently argued that long-term human capital investment of this nature should be treated differently from routine expenditure under fiscal deficit norms.
The Demographic Case for Support
Telangana made a pointed demographic argument to justify the scale of its education spending. According to SEEPEC data cited by the state, 56.33% of Telangana's population belongs to Backward Classes, 17.43% to Scheduled Castes, and 10.45% to Scheduled Tribes. The state contends that the YIIRS programme directly addresses education and nutrition deficits among these communities, and that its long-term returns to India's demographic dividend justify special fiscal treatment.
Context and What Comes Next
The SASCI scheme has been a key instrument through which the Centre has channelled interest-free loans to states for capital investment in recent years, with the overall envelope expanding in successive Union Budgets. Telangana's request for an additional ₹5,000 crore comes as several states compete for a share of the available pool ahead of the next budgetary cycle.
Whether the Centre accedes to both the SASCI request and the FRBM exemption will likely depend on Telangana's compliance with existing fiscal consolidation conditions and the overall fiscal headroom available to the Union government. A formal response from the Finance Ministry is awaited.
Point of View
It would set a precedent other states could invoke. The Centre has so far been cautious about such exemptions, aware that every carve-out erodes the consolidation framework. Telangana's demographic data submission is a deliberate move to shift the debate from fiscal rules to social equity — a framing that is harder for the Centre to dismiss publicly.
NationPress
13 Jul 2026
Frequently Asked Questions
What is the SASCI scheme and why is Telangana seeking funds under it?
The Scheme for Special Assistance to States for Capital Investment (SASCI) provides interest-free loans from the Centre to states to boost capital expenditure. Telangana has sought an additional ₹5,000 crore under the scheme to fund investments in education, healthcare, and rural infrastructure.
What is the Young India Integrated Residential Schools programme?
YIIRS is a ₹30,000 crore Telangana government initiative to provide quality education and nutritious meals to students from Backward Class, Scheduled Caste, and Scheduled Tribe communities through integrated residential schools. The state has sought an FRBM exemption to fund the programme via Externally Aided Projects.
Why is Telangana seeking an FRBM exemption?
The state argues that long-term human capital investments like YIIRS should not be counted against standard fiscal deficit limits under the Fiscal Responsibility and Budget Management Act. It contends that EAPs approved by the Department of Economic Affairs deserve special treatment given their developmental returns.
Has Telangana made this request before?
Yes. In September last year, a delegation led by Deputy CM Vikramarka — including Agriculture Minister Tummala Nageswara Rao — submitted a formal representation to Finance Minister Sitharaman seeking the same FRBM exemption for YIIRS. Wednesday's meeting is a follow-up on that earlier request.
Who is affected by the YIIRS programme?
The programme primarily targets students from Backward Classes, Scheduled Castes, and Scheduled Tribes, who together account for over 84% of Telangana's population according to SEEPEC data. The state says the initiative addresses chronic gaps in quality education and nutrition for these communities.
