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

The curious case of multiple entries of a female voter of Maharashtra: What ECI's online voter records reveal

By Venkatesh Nayak* Cyberspace is agog with data, names and documents which question the reliability of the electoral rolls prepared by the electoral bureaucracy in Maharashtra prior to the General Elections conducted in 2024. One such example of deep dive probing has brought to the surface, the name of one female voter in the 132-Nalasopara (Gen) Vidhan Sabha Constituency in Maharashtra. Nalasopara is part of the Palghar (ST) Lok Sabha constituency. This media report claims that this individual's name figures multiple times in the voter list of the same constituency.

N-power plant at Mithi Virdi: CRZ nod is arbitrary, without jurisdiction

By Krishnakant* A case-appeal has been filed against the order of the Ministry of Environment, Forest and Climate Change (MoEF&CC) and others granting CRZ clearance for establishment of intake and outfall facility for proposed 6000 MWe Nuclear Power Plant at Mithi Virdi, District Bhavnagar, Gujarat by Nuclear Power Corporation of India Limited (NPCIL) vide order in F 11-23 /2014-IA- III dated March 3, 2015. The case-appeal in the National Green Tribunal at Western Bench at Pune is filed by Shaktisinh Gohil, Sarpanch of Jasapara; Hajabhai Dihora of Mithi Virdi; Jagrutiben Gohil of Jasapara; Krishnakant and Rohit Prajapati activist of the Paryavaran Suraksha Samiti. The National Green Tribunal (NGT) has issued a notice to the MoEF&CC, Gujarat Pollution Control Board, Gujarat Coastal Zone Management Authority, Atomic Energy Regulatory Board and Nuclear Power Corporation of India Limited (NPCIL) and case is kept for hearing on August 20, 2015. Appeal No. 23 of 2015 (WZ) is filed, a...

1857 War of Independence... when Hindu-Muslim separatism, hatred wasn't an issue

"The Sepoy Revolt at Meerut", Illustrated London News, 1857 By Shamsul Islam* Large sections of Hindus, Muslims and Sikhs unitedly challenged the greatest imperialist power, Britain, during India’s First War of Independence which began on May 10, 1857; the day being Sunday. This extraordinary unity, naturally, unnerved the firangees and made them realize that if their rule was to continue in India, it could happen only when Hindus and Muslims, the largest two religious communities were divided on communal lines.

Spirit of leadership vs bondage: Of empowered chairman of 100-acre social forestry coop

By Gagan Sethi* This is about Khoda Sava, a young Dalit belonging to the Vankar sub-caste, who worked as a bonded labourer in a village near Vadgam in Banskantha district of North Gujarat. The year was 1982. Khoda had taken a loan of Rs 7,000 from the village sarpanch, a powerful landlord doing money-lending as his side business. Khoda, who had taken the loan for marriage, was landless. Normally, villagers would mortgage their land if they took loan from the sarpanch. But Khoda had no land. He had no option but to enter into a bondage agreement with the sarpanch in order to repay the loan. Working in bondage on the sarpanch’s field meant that he would be paid Rs 1,200 per annum, from which his loan amount with interest would be deducted. He was also obliged not to leave the sarpanch’s field and work as daily wager somewhere else. At the same time, Khoda was offered meal once a day, and his wife job as agricultural worker on a “priority basis”. That year, I was working as secretary...

Ground reality: Israel would a remain Jewish state, attempt to overthrow it will be futile

By NS Venkataraman* Now that truce has been arrived at between Israel and Hamas for a period of four days and with release of a few hostages from both sides, there is hope that truce would be further extended and the intensity of war would become significantly less. This likely “truce period” gives an opportunity for the sworn supporters and bitter opponents of Hamas as well as Israel and the observers around the world to introspect on the happenings and whether this war could have been avoided. There is prolonged debate for the last several decades as to whom the present region that has been provided to Jews after the World War II belong. View of some people is that Jews have been occupants earlier and therefore, the region should belong to Jews only. However, Christians and those belonging to Islam have also lived in this regions for long period. While Christians make no claim, the dispute is between Jews and those who claim themselves to be Palestinians. In any case...

Bangladesh alternative more vital for NE India than Kaladan project in Myanmar

By Mehjabin Bhanu* There has been a recent surge in the number of Chin refugees entering Mizoram from the adjacent nation as a result of airstrikes by the Myanmar Army on ethnic insurgents and intense fighting along the border between India and Myanmar. Uncertainty has surrounded India's Kaladan Multimodal Transit Transport project, which uses Sittwe port in Myanmar, due to the recent outbreak of hostilities along the Mizoram-Myanmar border. Construction on the road portion of the Kaladan project, which runs from Paletwa in Myanmar to Zorinpui in Mizoram, was resumed thanks to the time of relative calm during the intermittent period. However, recent unrest has increased concerns about missing the revised commissioning goal dates. The project's goal is to link northeastern states with the rest of India via an alternate route, using the Sittwe port in Myanmar. In addition to this route, India can also connect the region with the rest of India through Assam by using the Chittagon...

How AMU student politics prioritises Islamist ideologies rather than addressing campus-specific concerns

By Yanis Iqbal* In his recent piece titled "Unmasking the Power Struggles of Soqme Teachers Behind the AMU Students’ Agitation," Mohammad Sajjad, professor of modern and contemporary Indian history at the Aligarh Muslim University (AMU), has has approached the recent protests against fee increases at AMU with a skeptical eye. He portrays them not as a pure, student-led reaction to financial burdens, but as possibly intertwined with deeper institutional rivalries. While recognizing that the university administration faces ongoing demands from the government and the University Grants Commission (UGC) to boost self-generated revenue via fee adjustments, he highlights a key shortfall: neither the administration nor the protesters have shared clear, comparative data on fee structures or their rationale.

A wake-up call for Uttarakhand: The human cost of unchecked development, environmental destruction

By Dr. Gurinder Kaur* On August 5, 2025, a cloudburst in Uttarakhand’s Uttarkashi district caused significant destruction. A sudden surge in the Kheer Ganga river's flow triggered a flash flood that hit the town of Dharali, completely destroying 40–50 buildings and houses and claiming five lives. More than 100 people are still missing, including nine army personnel. Due to heavy rainfall and landslides, traffic has come to a complete halt on 163 roads and five national highways in the state. Rescue teams are continuously assisting people in the affected areas. A large number of pilgrims heading to Gangotri usually stay in Dharali, which is why there are many hotels, restaurants, and homestays in the town.

NREGA Sangharsh Morcha demands rollback of NMMS App, restoration of workers’ rights

By A Representative The NREGA Sangharsh Morcha (NSM) has strongly demanded the immediate revocation of the National Mobile Monitoring System (NMMS) App used for recording workers’ attendance under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Citing the Union Ministry of Rural Development’s (MoRD) July 8, 2025 directive acknowledging widespread misuse and discrepancies in the NMMS App, NSM accused the government of admitting to deep-rooted corruption while continuing to impose a failed digital system.

Search This Blog