Refrain from additional borrowing, says CAG

A report by the Comptroller and Auditor General of India (CAG) on finances for March 2015 has instructed the state government not to borrow any extra amount, as it had to pay 50 per cent of the total debt in the next seven years. The liability of the state to repay the debt would be Rs 42,552.67 crore during the period of 2018-20 and Rs 42,160 crore during 2020-2022, which would put a strain on the government budget during that period. Also, the state debt has increased to Rs 2.37 lakh crore in 2014-15 from Rs 1.67 lakh crore in 2010-12.

“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,” the report has observed.

Also, the state debt went up to Rs 2.37 lakh crore in the years 2014-15 from Rs 1.67 lakh crore in the year 2010-11. The per capita debt also increased from Rs 17,275 in 2010-11 to Rs 21,125 in 2014-15, the report has noted.

The report has suggested, “The government may make concerted efforts to bridge the revenue gap and reduce its non-productive non-plan revenue expenditure so as to move towards revenue surplus status. For this, the government may consider mobilising additional resources through tax and non-tax sources.”

It has also warned the government to review the working of the state undertakings, rural banks and cooperatives that are making losses and where substantial government investments are blocked.

The resource gap in the state during 2013-14 and 2014-15 was negative, indicating decreasing capacity of the state to sustain the debt in the medium to long run.

This was a result of insufficiency of the incremental non-debt receipt to meet the incremental primary expenditure and incremental interest payments.