Government initiates measures to put State economy back on track

The State government has taken corrective measures to bring the economy back on track.

Senior officials claimed that the government exercised cost control to ensure accountability for every rupee spent without allowing scope for overspending. As a result, the quantum of spending on repayment of the interest and loans taken by the previous government had increased since the past four months.

This could be seen from the fact that the government had raised ₹17,618 crore through market borrowings in the four months since the Congress took over the reins last December. At the same time, the repayment of principal and interest was ₹25,911 crore indicating prudent fiscal management.

When asked about the restrictions imposed on the borrowing limit, a senior official said the State is allowed to borrow more as its GSDP is projected to increase significantly and it has been making timely repayment of principal and interest of the previous loans. The State’s GSDP in 2024-25, for instance, is expected to be ₹16.3 lakh crore, much higher than ₹14.16 lakh crore in 202324. The Government had accordingly proposed to raise an estimated ₹59,625 crore borrowings during the current fiscal and had borrowed ₹2,500 crore. “The government focussed on reducing the off-budget borrowings by close to ₹9,000 crore during the fiscal,” the official said.

In the white paper presented on State’s financial situation, the State government said the State’s debt, including market borrowings, off-budget borrowing and commitment on account of guarantees given to various corporations, crossed ₹7 lakh crore to reach ₹7.11 lakh crore. This has resulted in a heavy burden on account of repayment of principal and interest. While the new government raised borrowings to the tune of ₹15,968 crore in the four months of its assuming power, the previous BRS government raised ₹19,569 crore during the same period (December 2022March 2023). The quantum was much higher in 2021-22 when borrowings were to the tune of ₹26,995 crore indicating how the previous government went on a loan raising spree.

The impact of borrowings can be seen from the fact that the government spent ₹207 crore a day on average towards payment of principal and interest. The new government had focussed on reducing the debt burden which has been mounting and, at the same time, took steps to enhance capital expenditure on infrastructure development projects which accounted for ₹5,816 crore in the past few months.