Maharashtra's debt zooms to Rs 1,10,000 cr

Maharashtra's debt portfolio has risen to Rs 1, 10,000 crore (including the borrowings by special purpose vehicles floated by it) from Rs 93,000 crore in year ended March 31, 2004.

While senior government officials confirm that the debt position has peaked to 1, 10,000 crore, they insist that the state has been able to meet its liability servicing obligations in terms of interest and principal payments on loans without being unduly hard-pressed.

Development fund allocation, they admit, has been thinly spread in order to prevent fiscal imbalances from occurring.

"Not a single overdraft or ways and means advance has been resorted to by the state government in the current fiscal (2004-2005). In additional no defaults have been reported while making principal and interest payments. Salaries and pension payments are also on schedule," a senior official said.

The Comptroller and Auditor General of India for the fiscal year 2002-2003 had warned that the Maharashtra government is heading for a debt trap.

"Large revenue and fiscal deficit year after year show continued macro fiscal imbalances. It is not uncommon for the state to borrow for increasing its social and economic infrastructure base. However, hiking rations of fiscal liabilities to gross state domestic product (GSDP) together with a growing revenue deficit as percentage of fiscal deficit indicate that the state is getting into a debt trap," the report stated.

Fiscal 2002-2003 was a difficult financial year for Maharashtra. The state exhibited a comparatively higher growth in revenue expenditure at Rs 40, 474 crore, which led to an all-time high revenue deficit of Rs 9,371 crore, up 14.44 per cent over the previous year.

On the other hand, according to the CAG report, revenue receipts only exhibited a marginal rise of 3.36 per cent to Rs 31,103 crore as against the average increase of 9.78 per cent witnessed since the fiscal 1998-1999.

The CAG report further states: "Only through hard measures like reduction of revenue deficit and fiscal deficit (that stood at an all-time high of Rs 9,371 crore and Rs 14, 290 crore, respectively, in 2002-2003) by compressing non-developmental revenue expenditure and enhanced additional resource mobilisation through prudent tax reforms and periodic revision of user charges for increased cost recoveries for government services, prudent debt management and greater fiscal transparency in medium term framework can the state government can achieve long term fiscal stability."