The State is scrambling to raise resources to ensure uninterrupted implementation of the spree of welfare and developmental programmes such as Rythu Bandhu (farmers’ investment support scheme) and Dalit Bandhu (one-time grant of 10 lakh each to Dalit families) as funds are hard to come by.
The total debt including the borrowings by the public sector enterprises reached ₹4.33 lakh crore at the end of financial year 2021-22 and the burden is likely to be higher in fiscal 2022-23, considering the more-than-₹40,000 crore raised through market borrowings and other instruments. This is in comparison with the ₹75,557 crore debt it had inherited at the time of the State formation in 2014. The Union Finance Ministry said that of the ₹4.33 lakh crore outstanding, the State government’s debt stood at ₹2.83 lakh crore and the loans availed by the State-owned enterprises/institutions from commercial banks were to the tune of ₹1.31 lakh crore while loans taken from NABARD stood at ₹19,431 crore.
According to the Union Finance Ministry’s data, the State’s public debt outstanding continued to mount from ₹83,968 crore in 2014-15, including ₹8,121 crore raised during the year, reaching ₹2.83 lakh crore at the end of the 2021-22 fiscal. As a result, budgetary allocation for debt servicing are increasing each passing year with over ₹22,000 crore being earmarked for the current fiscal. This was against the ₹18,911 crore projected for interest payment last fiscal and the State ended up paying over ₹20,000 crore.
Though utilised for projects like Kaleshwaram and other capital expenditure, the State drew flak from the Comptroller and Auditor General of India (CAG) last year for its spree of borrowings which exceeded the limits. The CAG, in its state finances audit report, said that apart from the liabilities of ₹2.75 lakh crore (excluding back-to-back loans in lieu of GST compensation to be serviced out of GST compensation cess), the State government is also liable to pay the principal and interest on account of its Off-Budget Borrowings (OBB) to an extent of ₹97,940.45 crore.
Considering that the OBB and other liabilities are to be serviced out of the State Budget, the ratio of debt to GSDP would be 38.10%, which is 13.10% higher than the target of 25% as per the State’s Fiscal Responsibility and Budget Management Act. “This is also 8.60% higher than the norm of 29.50% prescribed by the XV Finance Commission,” the CAG said in its report.
The State, however, justified the guarantees extended to various corporations to riase finances claiming that repayments are being made from their accounts and hence, they could not be considered as OBB. “The reply is not acceptable as we have considered only those cases where payment of interest or repayment of principal was done from out of the Government resources only,” the CAG said. The CAG warned that non-disclosure of OBB has a dual impact of diluting public financial management and legislative oversight and is in contravention of the recommendations of the XV FC.
The CAG was critical that the government which resorted to longer maturity borrowings did not make any financial impact study for them and it was also not disclosing all the guarantees given by it to various institutions. The government also did not ensure financial performance of accountability of these institutions before providing guarantees and market borrowings had to be used to finance revenue and fiscal deficits.
This has resulted in imposition of restrictions on the borrowings since the previous fiscal when the quantum of OMBs was reduced by close to ₹20,000 crore. Similar restrictions are likely to be encountered during the current year, an election year, making it difficult for the State to meet its requirements on welfare schemes and sops to different sections.
