SURAJ NANDREKAR
suraj@herald-goa.com
PANJIM: Vindicating Herald’s stand on debt management, the Comptroller Auditor General of India (CAG) has severely criticised the State’s debt management and has asked the government to adopt a well thought out debt management strategy.
Herald has time and again raised the issue of loans and borrowings of the State government which has reached nearly Rs 15,000 crore.
CAG, in its report on State’s finances for March 31, 2015, has also asked the State to keep a tab on borrowings.
“A well thought out debt repayment strategy will have to be worked out by the government to ensure that no additional borrowings, which mature in these critical years, are made,” says the CAG report.
The debt sustainability implies State’s ability to service the debt, it says.
“Apart from the magnitude of the debt of the State government, it is important to analyse the various indicators that determine the debt sustainability of the State,” the report states.
It says the outstanding debt increased from Rs 8,985 crore in 2010-11 to Rs 13,811 crore in 2014-15 and debt-GSDP ratio showed a considerable variation during the five year period.
The debt-GSDP ratio increased from 26.96 percent in 2013-14 to 26.34 percent in 2014-15.
“However, the outstanding debt at the end of 2013-14 represented 196.82 percent of the revenue receipts which reduced to 180.48 percent in 2014-15,” the report said.
“The persistent negative resource gap is indicative of the non-sustainability of debt while positive resource gap strengthens the capacity of the State to sustain the debt. The negative resource gap for three consecutive years during the period 2011-12 to 2013-14 turned 2014-15. It happened mainly on the account of 10.32 percent increase in primary expenditure against 19.12 percent increase in non-debt receipts during the current year,” the report says.
It adds the net funds available from borrowed funds after providing for the interest and repayment declined from Rs 851 crore in 2012-13 to Rs 175 crore in 2014-15.
The maturity of the State debt indicates that Rs 3,390.13 crore of the total State debt of Rs 9,936.03 crore is repayable within the next five years while remaining Rs 6,545.90 crore is payable from the sixth year onwards.
It further indicates that the liability of the State to repay the debt would be Rs 1,743 crore during the period 2018-20 and Rs 1,432 crore during 2020-22 which would put a strain on the government budget during that period.
