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

When democracy becomes a performance: The Tibetan exile experience

By Tseten Lhundup* I was born in Bylakuppe, one of the largest Tibetan settlements in southern India. From childhood, I grew up in simple barracks, along muddy roads, and in fields with limited resources. Over the years, I have watched our democratic system slowly erode. Observing the recent budget session of the 17th Tibetan Parliament-in-Exile, these “democratic procedures” appear grand and orderly on the surface, yet in reality they amount to little more than empty formalities. The parliamentarians seem largely disconnected from the everyday struggles faced by ordinary exiled Tibetans like us.

Study links sanctions to 500,000 deaths annually leading to rise in global backlash

By Bharat Dogra International opinion is increasingly turning against the expanding burden of sanctions imposed on a growing number of countries. These measures are contributing to humanitarian crises, intensifying domestic discord, and heightening international tensions, thereby increasing the risks of conflicts and wars.

Dhurandhar: The Revenge — Blurring the line between fiction and political narrative

By Mohd. Ziyaullah Khan* "Dhurandhar: The Revenge" does not wait to be remembered; it arrives almost on the heels of its predecessor, released on March 19, 2026, just months after the first film’s December 2025 debut. The speed of its arrival feels less like creative urgency and more like calculated timing—cinema responding not to storytelling rhythm but to the emotional climate of its audience. Director Aditya Dhar, along with actor Yami Gautam, appears acutely aware of this moment and how to harness it.

Beyond the island: Top mythologist reorients the geography of the Ramayana

By Jag Jivan In a compelling new analysis that challenges conventional geographical assumptions about the ancient epic, writer and mythologist Devdutt Pattanaik has traced the roots of the Ramayana to the forests and river systems of Central and Eastern India, rather than the peninsular south or the modern island nation of Sri Lanka.

BJP accounts for 99% of political donations in Gujarat: Corporate giants dominate

By Jag Jivan An analysis of the official data on donations received by national parties from Gujarat during the Financial Year 2024-25 reveals a staggering concentration of funding, with the Bharatiya Janata Party (BJP) accounting for nearly the entirety of the contributions. The data, compiled in a document titled "National Parties donations received from Gujarat during FY-2024-25," lists thousands of transactions, painting a detailed picture of the financial backing for political parties from one of India’s most industrially significant states.

Alarming decline in India's repair culture threatens circular economy goals: Study

By Jag Jivan A comprehensive new study by environmental research and advocacy organisation Toxics Link has painted a worrying picture of India's fading repair culture, warning that the trend towards replacement over repair is accelerating the country's already critical e-waste crisis.

Captains extraordinaire: Ranking cricket’s most influential skippers

By Harsh Thakor* Ranking the greatest cricket captains is a subjective exercise, often sparking passionate debate among fans. The following list is not merely a tally of wins and losses; it is an assessment of leadership’s deeper impact. My criteria fuse a captain’s playing record with their tactical skill, placing the highest consideration on their ability to reshape a team’s fortunes and inspire those around them. A captain who inherited a dominant empire is judged differently from one who resurrected a nation’s cricket from the doldrums. With that in mind, here is my perspective on the finest leaders the game has ever seen.

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

‘No merit’ in Chakraborty’s claims: Personal ethics talk sans details raises questions

By Jag Jivan A recent opinion piece published in The Quint by Subhash Chandra Garg has raised questions over the circumstances surrounding the resignation of Atanu Chakraborty from HDFC Bank , with Garg stating that the exit “raises doubts about his own ‘ethics’.” Garg, currently Chief Policy Advisor at Subhanjali and former Secretary of the Department of Economic Affairs, Government of India, writes that the Reserve Bank of India ( RBI ) appears to find no substance in Chakraborty’s claims, noting, “It is clear the RBI sees no merit in Atanu Chakraborty’s wild and vague assertions.”

Search This Blog