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

Noam Chomsky, top scholars ask NRIs to take stand on human rights violations in India

Counterview Desk
Renowned world scholars, including Noam Chomsky, James Petras, Angela Davis, Fredric Jameson, Bruno Latour, Ilan Pappe, Judith Butler, among others, have issued a statement castigating the Narendra Modi government for allegedly creating an environment of fear through arrests, intimidation and violence.

Actionable programme for 2019 polls amidst lynch mobs, caste violence, hate mongering

Counterview Desk
Reclaiming the Republic, a civil rights network, has released a document prepared under the chairmanship of Justice AP Shah (retired) -- and backed, among others, by Supreme Court advocate Prashant Bhushan, bureaucrat-turned-human rights activist Harsh Mander, economist Prabhat Patnaik, Right to transparency activist Anjali Bhardwaj and social scientist Yogendra Yadav  (click HERE for full list) -- with the "aim" of putting forth policy and legislative reforms needed to “protect” and “strengthen” the Constitutional safeguards for India’s democratic polity.

Call to support IIM-Bangalore professor, censured for seeking action against Uniliver

Counterview Desk
Sections of the Indian Institute of Managements (IIMs) across India have strongly reacted to the decision to censure Dr Deepak Malghan, a faulty at IIM-Bangalore. Prabhir Vishnu Poruthiyil, who is faculty at IIM-Tiruchirapalli, has sought wider solidarity with Dr Malghan, saying, "The administration has censured Deepak for merely suggesting a meaningful action against Hindustan Unilever for their abysmal environmental record" by “disinviting” it for campus placement.

India under Modi "promoted" crony business, protected financial fraudsters, fueled bigotry

By Sandeep* and Rahul Pandey**
Narendra Modi's ascension to power was accompanied with jubilation and expectation. His supporters were expecting an end to era of corruption and initiation of good governance which was described as Achche Din. His party's adherence to idea of nationalism was believed to make India a vibrant country and guide India to be a world leader. He gave the slogan of 'Sabka Saath, Sabka Vikas' conveying that his government was for all.
Corruption The government system is infested with corruption. A minimum of 10% is siphoned off from government schemes and projects, some of which goes back to political party in power and remaining is pocketed by various administrative, executive and political functionaries. This corruption continues and has increased. Now an additional Rashtriya Swayamsewak Sangh (RSS) person working as Official on Special Duty or some equivalent position in every government department also has a share in this booty.
The Narendra M…

Inviting Rajapaksa to India "insult" to 1,40,000 Tamils killed by Sri Lankan army

Counterview Desk
In the context of Sri Lankan opposition leader Mahinda Rajapaksa being invited in India, about 75 human rights activists*, claiming to be concerned about rights violations during the civil war in Sri Lanka, especially in 2009, have joined together to express their dissent through a statement.

Post-advisory, Govt of India appears reluctant to ban e-cigarettes, "harmful" to kids

By Rajiv Shah
Is the Government of India dilly-dallying over the issue of banning e-cigarettes, which have been declared by anti-tobacco activists across the world as providing “an entryway to nicotine addiction”, especially among the kids? It would seem so, if the latest developments are any guide.

A Godse legacy? BJP rulers have "refrained" from calling Gandhi Father of the Nation

By Dr Hari Desai*
What an agony! On one hand, the entire India is celebrating the 150th birth anniversary of Mahatma Gandhi under the leadership of Prime Minister Narendra Modi, but on the other side, so-called Hindu Mahasabha members have been found mock-enacting the killing of the Mahatma and celebrating the murder by distributing sweets!

No aadhaar, no ration? Hard blow by Gujarat govt on poor and marginalized

By Pankti Jog*
Only those who have aadhaar registration and linked it with ration card will get ration from a Public Distribution System (PDS) shop. This decision of the Gujarat government has hit very badly thousands of poor and marginalized communities of Gujarat, especially during the drought year.

World Bank needs a new perspective on development, not just a new president

By Maju Varghese*
The resignation of the World Bank President Jim Yong Kim was an unexpected development given the fact that he had three more years to complete his tenure. Resignations at such a high level after bidding for a second term is unusual which prompts people to think what would have led to the act itself.

Not just Indian women engineers, men too face sexual harassment at workplace: US study

By Rajiv Shah
A recent research, carried out jointly by two US-based non-profit organizations, Society of Women Engineers (SWE) and Center for WorkLife Law (WLL), based at the University of California, Hastings College of the Law, has found that 45% of women engineers as against 28% of men engineers complained that it was perceived as “inappropriate when women argued at work, even when it was work-related.”