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 for a well thought debt management strategy.
Herald has time and again raised the issued of loans and
borrowings of the state government which has reached nearly Rs 15,000 cr.
CAG, in its report on State’s finances for MArch 31, 2015,
has 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.
Further it says, the debt sustainability implies State’s
ability to service the debt.
“Apart from the magnitude of the debt of the state
Government, it is important to analyze 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 withing the
next five years while remaining Rs 6,545.90 crore is payable from the sixth
year onwards.
It further indicates that
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.
Fiscal Imbalances
According to CAG three key fiscal parameters – revenue,
fiscal and primary deficits indicate the extent of overall fiscal imbalances in
the finances of the state Government during a specified period.
“The deficit in the government accounts represents the gap
between its receipts and expenditure. The nature of deficit is an indicator of
the prudence of the fiscal management of the government. Further, the ways in
which the deficit is financed and the resources raised are applied are
important pointers to its fiscal health,” the report adds.
