The West Bengal government has been unable to contain its market borrowings.
In the first six months of the financial year, the West Bengal government has raised Rs 8,500 crore as state development loan, which is 42 per cent of the total market borrowing projections for the year.
This year, the state government plans to raise Rs 25,838 crore as market loan, against last year's projection of Rs 20,500 crore, a rise of nearly 26 per cent over the last year, according to data from the West Bengal Budget document.
Notably, West Bengal had registered a growth of 7.6 per cent in 2012-13, against 6.6 per cent growth of the previous year, but that has hardly been a deterrant in checking its market borrowings.
Market loans are the chief contributor to capital receipts, which remain in surplus in West Bengal. It accounted for 70 per cent of the capital receipts last financial year (revised estimates), according to rating agency, Care.
In the last round of borrowing, West Bengal raised Rs 1,500 crore at a cut-off yield of 9.84 per cent, the highest among all other states. In view of the debt burden, West Bengal has been given special concessions by the 13th Finance Commission for achieving the fiscal correction target of eliminating revenue deficit and achieving a fiscal deficit to Gross State Domestic Product ratio of three per cent by 2014-15, as opposed to other states which were required to achieve these targets by 2011-12.
"Even though the fiscal consolidation roadmap of the Thirteen Finance Commission for West Bengal stipulates low levels of revenue deficit, the state has been recording a considerable high deficit, over and above the mandated level," according to the recently published state update on West Bengal by Care.
West Bengal has the highest debt-Gross Domestic Product ratio among the debt-stressed states. The outstanding debt stood at Rs 2,26,193 crore in FY13(BE), nine per cent more than that in FY12, according to Care. It is expected to grow nine per cent in FY14(BE) to Rs 2,47,423 crore.
