Skip to main content

Reserve Bank study finds Gujarat has to spend huge funds from coffers to pay up for interest taken on loan

Counterview Desk
A new study, “Debt Sustainability at the State Level in India”, by Balbir Kaur, Atri Mukherjee, Neeraj Kumar and Anand Prakash Ekka of the Department of Economic and Policy Research of the Reserve Bank of India (RBI), has found that, as of March-end 2013, a huge 17 per cent of the revenue expenditure of the Gujarat government goes into paying up interests on loan taken by it over the years, which is higher than most states.
Suggesting that this is higher all 17 major states taken up for analysis, except West Bengal (20.9 per cent), the data suggest that Gujarat has progressively paid a higher proportion of interest on loan compared to most states ever since 1981.

Thus, the study finds that between1981-82 and 1991-92, interest formed 10.3 per cent of the revenue expenditure of the Gujarat government, which was higher than six other states. Between 1992-93 and 1996-97, 15.3 per cent of the revenue expenditure went into paying interest, which was, again, higher than six other states. Between 1997-98 and 2003-04, once again, six states paid a higher proportion of revenue expenditure as interest.
But things clearly changed thereafter. From 2004-06 to 2012-13, when ex-Gujarat chief minister Narendra Modi was at his peak, Gujarat spent 20.6 per cent of the revenue expenditure as interest on loans, which was second highest, next to West Bengal (20.6 per cent). 
Worse, a further analysis suggests, from 2004-05 to 2012-13, 21.2 per cent of the revenue receipts, which the Gujarat government received as taxes and non-tax revenues, went into paying up interest on loans, which was higher than most states except Punjab (23 per cent) and West Bengal (24.7 per cent).
The study underlines, there could be “a serious problem of intolerable debt in the long-run equilibrium” in states where the interest payments to revenue receipts ratio was “above the tolerable limit of 20 per cent.” Indeed, Gujarat is one of the three states which falls in this category.
The study further finds that between 2004-05 and 2012-13, Gujarat’s debts formed 29.8 per cent of the Gross State Domestic Product (GSDP), suggesting that these were unsustainable. This was higher than seven other states, suggesting that eight other states, with a higher debt-GSDP ratio, also had similar unsustainable nature of debt. On the other hand, as many states had a lower debt-GSDP ratio, suggesting their debt was more sustainable than Gujarat’s.
The study concludes that “the debt sustainability indicators showed significant improvement during 2004-05 to 2012-13 compared to the earlier phase (1997-98 to 2003-04).” But, clearly, as for Gujarat, this was not the case.
Thus, between 1981-82 and 1992-93, Gujarat’s debt-GSDP ratio was 17.6 per cent and between 1993-93 and 1996-97 it was 19.9 per cent. It shot up to 30.6 per cent in the next phase, between 1997-98 and 2003-04, and in the last phase it went down marginally.

Comments

TRENDING

IMA vs Ramdev: Why what's good or bad for goose should be good or bad for gander

By Dr Amitav Banerjee, MD* Baba Ramdev and his associate Balkrishna faced the wrath of the Supreme Court for their propaganda about their Ayurvedic products and belittling mainstream medicine. Baba Ramdev had to apologize in court. His apology was not accepted and he may face the contempt of court with harsher punishment. The Supreme Court acted on a public interest litigation (PIL) moved by the Indian Medical Association (IMA).

Women innovators on simple, revolutionary alternate solutions for water problems

By Proshakha Maitra, Mansee Bal Bhargava* The detrimental effects of uncontrolled population rise and accelerated change in the global climate have posed tremendous pressure on the water and sanitation. This calls all stakeholders, from both developed and developing nations, to improve their resilience and to instigate sustainability. It is more crucial than ever to optimise the use of the resources we have on hand since the world population is projected to reach 9.7 billion by 2050.

Magnetic, stunning, Protima Bedi 'exposed' malice of sexual repression in society

By Harsh Thakor*  Protima Bedi was born to a baniya businessman and a Bengali mother as Protima Gupta in Delhi in 1949. Her father was a small-time trader, who was thrown out of his family for marrying a dark Bengali women. The theme of her early life was to rebel against traditional bondage. It was extraordinary how Protima underwent a metamorphosis from a conventional convent-educated girl into a freak. On October 12th was her 75th birthday; earlier this year, on August 18th it was her 25th death anniversary.

Alleged killing of another Bangladesh youth inside Indian territory: NHRC inquiry sought

By Kirity Roy* There was yet another incident of the killing of a Bangladeshi youth by the Border Security Force personnel attached with ‘Barthar’ BOP of ‘G’ Company of 75 BSF Battalion. In last five years several incidents of killings happened under this police station’s jurisdiction and the cases will get the award as “Not Guilty” as usual.

Modi model, Hindutva icon 'justified' alliance with Muslim League before Independence

By Shamsul Islam*  Our PM describes himself as ‘Hindu’ nationalist and member of RSS. He proudly shares the fact that he was groomed to be a political leader by one of the two fathers of the Hindutva politics, MS Golwalkar (the other being VD Savarkar) and given the task of establishing Hindutva polity in India after eradicating secularism.

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

Crusader for people’s causes, this Hollywood actor entered 'unexplored zones' in US

By Harsh Thakor*  Marlon Brando on April 3rd completes his birth centenary. He perished in 2004, on July 1, aged 80 years. Arguably in Hollywood Brando penetrated sensitivity and versatility at an unparalleled scale and discovered new horizons or explored path breaking zones in acting.

Nuclear power expansion: Is AEC's new, 'unrealistic' target fully backed by PMO?

By Shankar Sharma*  Another unrealistic and tall claim by Atomic Energy Commission (AEC) has been announced: India is eyeing 100 GW nuclear power by 2047, the AEC chairman  AK Mohanty   has said. A few years ago, the dream target for the Indian nuclear establishment was 275,000 MWe of nuclear power by 2050 (as per DAE document of 2008 "A Strategy for the Growth of Electricity in India”). Now this target of 100 GW nuclear power by 2047. And as at the end of February 2024, the actual nuclear power capacity was only 7,480 MWe, which formed only 1.7% of the total power capacity in the country. 

'Flawed' argument: Gandhi had minimal role, naval mutinies alone led to Independence

Counterview Desk Reacting to a Counterview  story , "Rewiring history? Bose, not Gandhi, was real Father of Nation: British PM Attlee 'cited'" (January 26, 2016), an avid reader has forwarded  reaction  in the form of a  link , which carries the article "Did Atlee say Gandhi had minimal role in Independence? #FactCheck", published in the site satyagrahis.in. The satyagraha.in article seeks to debunk the view, reported in the Counterview story, taken by retired army officer GD Bakshi in his book, “Bose: An Indian Samurai”, which claims that Gandhiji had a minimal role to play in India's freedom struggle, and that it was Netaji who played the crucial role. We reproduce the satyagraha.in article here. Text: Nowadays it is said by many MK Gandhi critics that Clement Atlee made a statement in which he said Gandhi has ‘minimal’ role in India's independence and gave credit to naval mutinies and with this statement, they concluded the whole freedom struggle.

How huge crowd at Mukhtar Ansari funeral is comparable to BJP's 'people's court' talk

By Vidya Bhushan Rawat*  The massive crowd at the funeral of Mukhtar Ansari in Mohammadabad reflects the power and influence that his family wields in the area. One can't deny that he had enormous power in Ghazipur and Mau districts. But the crowd that came and chanted slogans in his favour does not exonerate him of his conviction by the court.  It is important that we understand this.