WB debt state alarming

The debt burden of West Bengal (WB) is reaching an alarming position, worse than most of the major states of the country.

The state has significantly increased its debt burden recording a debt to gross state domestic product(GSDP) ratio as high as 45.4 per cent as on 31 March 2004, growing by around 25 per cent point from 20.8 per cent of 1996, showed a recent Reserve Bank of India(RBI) report.

WB has occupied the third position after Orissa and Rajasthan, whose debt GSDP ratio has been even worse at 70.8 per cent and 54.0 per cent respectively and is one of the five states recording debt GSDP ratio of more than 40 per cent level as on March 2004.

Data further revealed that the state could support only 37 per cent of its revenue expenditure from its own revenue, much lower than developed states like Haryana, Tamil Nadu, Andhra Pradesh where the corresponding figure was 78.9 per cent, 66.9 per cent and 60.2 per cent respectively. The ratio of revenue deficit (RD) to fiscal deficit (FD) for the state has been amongst the highest recording 70.4 per cent in 2003-04 only after Uttar Pradesh that recorded 97.7 per cent.

This further reflected that the state has deployed lower proportion of the fiscal deficit to fund capital expenditure. The state has been placed in the group of states with poorest quality of debt, according to the report.

The report further noted that Karnataka and Tamil Nadu has improved their RD to FD ratio to 23.7 per cent and 48.1 per cent during 2003-04 from a previous year's figure of more than 50 per cent. Punjab and Kerela has been showing marks of improvement but for West Bengal the scene has remained the same.

Though around 43 per cent of the states total revenue receipt has come from current transfers from the centre during 2003-04, the poor quality has lowered current level of transfers as compared to other states.

WB was among very few large states whose current transfers from centre to total revenue receipts ratio was higher than 40 per cent.