The Comptroller and Auditor General (CAG) of India, has recommended a more prudent public debt management to the Uttar Pradesh government.
The debt-Gross State Domestic Product (GSDP) ratio was 41 per cent at the end of 2009-10 financial year and UP used 96 per cent of its borrowed funds for discharging debt liabilities in the last three years.
In its latest report on UP finances pertaining to 2009-10 tabled in state assembly, CAG pointed out although UP was maintaining a sinking fund, the balances may not be sufficient for amortisation of loans. It has suggested maintaining a calendar of borrowings to avoid bunching towards the end of the financial year and a ‘clear monitoring’ of the maturity profile of debt repayments.
However, the public debt-GSDP situation in UP has improved to some extent. This ratio had decreased to about 39 per cent during 2010-11 and is pegged to further fall to 32 per cent in the current financial year with the GSDP projected near Rs 6,00,000 crore. The public debt of the government is likely to swell to Rs 2,04,000 crore during 2011-12, up from Rs 1,88,000 crore during 2010-11.
Besides, CAG rapped UP for laxity in monitoring the use of funds directly transferred by the Centre to the state implementing agencies. During 2009-10, the Centre transferred Rs 13,710 crore to UP, but there was no single monitoring agency and there was no readily available data on how much was actually spent in any particular year on major flagship schemes.
Average return on government’s investments in statutory corporations, government companies, joint stock companies and cooperatives was 0.013 per cent in the last three years, whereas average interest outgo on its borrowings was 6.29 per cent during the corresponding period. “This is clearly an unsustainable proposition,” it said.
Meanwhile, excess expenditure of Rs 10,521 crore incurred by UP during 2005-09 required regularisation under Article 205 of the Constitution.