Under debt, HP dials RBI
SHIMLA : Reeling under a debt of over 46,500 crore rupees, the cashstarved Himachal government will again raise a loan of Rs 500 crore from the Reserve Bank of India (RBI) to pay 3% dearness allowance arrears to its employees.
Chief minister Jai Ram Thakur who also holds the finance portfolio, has talked little so far on financial prudence in the state. It will be for second time after taking over as the chief minister that his government will borrow from the RBI to meets it’s finances.
Himachal’s total debt has increased from Rs 28,207 crore in 2012 to Rs 46,500 crore. Two days after his government was sworn in on 27 December, Jai Ram Thakur announced 8% DA to state government employees payable from January 1, 2016. The DA will be payable to 1.78 lakh employees off the total 2.68 lakh of them in the state. The government will have to pay Rs 650 crore for 3% DA arrears.
The Jai Ram Thakur government had earlier raised a loan of Rs 500 crore last month to pay the salaries. According to the RBI cap, on the basis of 3% of the state gross domestic product (GDP), the state can avail a market loan of Rs 3,500 crore for the current fiscal. Overall fiscal liabilities of the state increased by Rs12,969 crore (46%) from Rs 28,228 crore in 2011-12 to Rs 41,197 crore in 2015-16.
The state government spends 32 % of the budget in paying pension to its former employees whole 10% is spend on the salaries of the current ones. Major portion of the state budget also goes in paying the interest.
The government pays 15 % on paying the interest for loans and another 10% is spent for disbursing loans to the farmers.
Its only 25 % of the budget that the government spends on development. The per capita debt stands at around Rs 55,000. The Centre has been giving Rs 8,000 crore a year as revenue deficit grant to bail out the state, but this relief is just a stopgap solution.
Successive state governments have failed to mobilise resources and tax collection went down after the good and services tax (GST) was implemented this July. In addition, over the last year, market loan burden has also reached an alarming position.
It has been pointed out by the government auditor that 8% of the public debt is payable in the next year; 38% in next five years and the remaining 54% after the next five years, which will further stress the state fiscals in years to come.
The comptroller and auditor general (CAG) had pointed out that the fresh market loan is being used to meet the past obligations. Even in 2015-16, Himachal used 32% of fresh borrowing to repay the previous loans. For 2015-16, market borrowing was Rs 2,450 crore while the expenditure in prescribed sector was Rs 1,664 crore (68%).