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RBI State Finances Report: In a recently published study titled ‘State Finances: A Study of Budgets of 2022-23’, the Reserve Bank of India (RBI) has projected a decline in the debt ratio of all states to their combined GDP. He has said that the total debt pressure on the states in 2022-23 has come down from 31.1 percent of GDP in 2021-22 to 29.5 percent of GDP in 2022-23.
Gujarat
Gujarat is now facing the threat of rising public debt, which has increased from Rs 3.20 lakh crore in March last year to Rs 3.40 lakh crore. This rising debt coupled with falling revenue has raised concerns among opposition leaders and local experts. Earlier, the estimated public debt for Gujarat was pegged at Rs 3,50,000 crore. However, the revised estimate is Rs 3,40,000 crore and is expected to reach Rs 3,81,000 crore by next year. When Gujarat’s Finance Minister Kanubhai Desai presented the state budget for the financial year 2022–23 on 3 March 2022, the fiscal deficit was targeted at Rs 36,113 crore (1.64 percent of the state’s GDP). As per the revised estimates, the fiscal deficit was estimated to be 1.51 per cent of the state GDP, which was lower than the budget estimate.
Despite these concerns, the estimated fiscal deficit for 2022-23 (1.64 of GSDP) is within the limit of four per cent of GSDP approved by the central government in the Union Budget for 2022-23.
Punjab
Chief Minister Bhagwant Mann It has been more than seven months since the 14-month-old Aam Aadmi Party (AAP) government led by AAP announced the revival of the Old Pension Scheme (OPS) for over 1.75 lakh employees, but its implementation is yet to come. Could not happen. The reason: With an existing debt of Rs 3.12 lakh crore, the state is inching towards bankruptcy, with increased borrowing and promises like free water and electricity to a certain extent in the recently concluded assembly elections. As per the state budget, the effective outstanding debt to GSDP is estimated to be 46.81 per cent in 2023-24. An official familiar with the matter told IANS that popular announcements made due to political compulsion have kept the debt rising. Now it has increased to more than two lakh 52 thousand crores.
Concern over Karnataka’s financial condition in era of ‘freebies’ politics
The Karnataka Chamber of Commerce and Industry has given a week’s ultimatum to the Congress government to roll back the hike in electricity rates. The Chamber has warned that if this does not happen, all industries will shut down and protest.
Former Chief Minister Basavaraj Bommai has expressed concern over the withdrawal of Rs 1,500 crore allocation for MSP for farmers in the last budget. He also expressed concern over the diversion of funds allocated for the construction of 9,556 school buildings across the state. He has also warned not to cut the funds allocated for free chemotherapy for cancer patients and free dialysis facility up to one lakh times.
To ensure the development of Bengaluru, doubts are also being raised on providing funds to the metro project, suburban projects. These developments are coming after the formation of the newly elected Congress government in the state, which is ushering in a new era of ‘free’ politics in Karnataka. The state is known for a strong economy and is one of the top revenue generating states.
Karnataka Chief Minister Siddaramaiah has said that the government will need Rs 59,000 crore annually to implement the five guarantees as promised in the election. The financial requirement for the remaining months of the current year is Rs 41,000 crore.
The Directorate of Economics and Statistics has told in its advance estimates that the state has registered a growth of 7.9 percent in 2022-23. It also states that the per capita income in the state has increased from Rs 2.04 lakh to Rs 3.32 lakh. The state has been successful in adhering to the fiscal parameters prescribed in the Karnataka Fiscal Responsibility Act, 2002, except for a few years during the Covid-19 pandemic.
Former CM Bommai had claimed that he is presenting a revenue surplus budget for 2023-24. However, many questions are now being raised as the state government is set to spend Rs 59,000 crore every year on ‘freebies’. The opposition is demanding implementation of free schemes without any conditions – if the Congress government bows down, the expenditure will increase to one lakh crore rupees annually.
Debt-ridden Himachal lands in market for Rs 800 crore loan
The hill state of Himachal Pradesh, whose economy is largely dependent on tourism, horticulture and hydropower, has a debt of Rs 75,000 crore. In this, there is a liability of about 11 thousand crore rupees in the form of continuously increasing wages and arrears of salary and dearness allowance of employees and pensioners from the previous government. Despite facing a mountain of debt, the six-month-old Congress government has fulfilled its promise to implement the Old Pension Scheme (OPS), which is now costing huge sums of money.
The OPS benefitted 1.36 lakh government employees, an important vote bank, but cost the government an annual burden of Rs 800-900 crore. Now the impact of the significant freebies is also being felt on the state’s economy. The state does not have money for salaries, pensions and development projects. For these, the government is raising an additional loan of Rs 800 crore.
UP’s debt will be Rs 7.84 lakh crore in the financial year 2023-24, 40 percent more than before
The Reserve Bank of India (RBI) has claimed that the collective debt of states as a percentage of GDP is expected to decline to 29.5 per cent in 2022-23, compared to 31.1 per cent in 2020-21. In the next financial year 2023-24, the debt burden of Uttar Pradesh is estimated to reach Rs 7.84 lakh crore, which is about 40 percent more.
general elections are round the corner and Yogi Adityanath The government is pushing populist schemes, financial experts feel that the debt may increase further. According to the UP annual budget, the nominal UP Gross State Domestic Product (GSDP) is estimated to be Rs 24.39 trillion in 2023-24. Interestingly, the estimated public debt of Rs 7.84 trillion is Rs 94,000 crore or about 14 per cent more than Uttar Pradesh’s annual budget of Rs 6.90 trillion.
Heavy debt on Madhya Pradesh
The state government is announcing several populist schemes and freebies to woo the voters, while the state is in debt of around Rs 3.5 lakh crore. Experts say that the average per capita debt in the state has increased rapidly in the last five-six years. If we look at the debt figures, then every citizen of the state has a debt of Rs 41 thousand. It was estimated to be Rs 13,853 by the end of March 2016, while it was recorded at Rs 10,896 in the financial year 2013-14. Experts claim that the Madhya Pradesh government is going through a severe economic crisis.
The economic condition of Madhya Pradesh can be understood from the fact that in the last year 2022-2023, the state presented an annual budget of Rs 2.79 lakh crore, while the government had an increasing debt of Rs 3.31 lakh crore.
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