The fiscal situation in Uttar Pradesh has worsened considerably and the state is close to sliding into a debt trap, reveals a state government study.
Revenue expenditure has been outpacing revenue receipts for the last 10 years and capital receipts are constantly being used to meet this shortfall. The state governments loans are mostly used up to meet repayment of previous loans.
According to the study, 1987-88 was the last year when revenue receipts exceeded revenue expenditure. That year, there was a surplus of Rs 251 crore with revenue receipts at Rs 5,331.93 crore and expenditure at Rs 5,079.94 crore.
But, since then there has always been a revenue deficit, which has been only increasing. The deficit, which stood at Rs 604.56 crore in 1988-89 has gone up to Rs 7,618.40 crore in the budget estimates of 1998-99.
In the last five years, while revenue receipts have increased by 44 per cent, the revenue expenditure has surged by 571 per cent.
The total debt of the state has doubled in the last five years. It has risen from Rs 26,920 crore in 1993-94 to Rs 50,524 crore in the revised budget estimates for 1997-98.
There is very little left after paying of interest and principal. According to the revised estimates for 1997-98, loans from the Centre are Rs 4,013.44 crore against the repayment of principal and interest of Rs 3,580.85 crore, implying a net inflow of only Rs 432.59 crore. Loan repayments used up Rs 1,116.39 crore from the market borrowings of Rs 1,247.75 crore, an inflow of only Rs 131.36 crore. The inflow of fresh small savings were Rs 1,500 crore, while the repayments were Rs 1,610.36 crore, an outflow of Rs 110.36 crore. The total inflow through these sources in 1997-98 has been only Rs 453.31 crore, while the debt burden has increased by Rs 6,760 crore.
Another indicator of the worsening fiscal situation is the ratio between the revenue expenditure and capital expenditure.
In 1987-88, of the total expenditure, the revenue expenditure was 82.7 per cent and capital expenditure was 17.3 per cent, considered to be an adverse ratio.
The revised budget estimates for 1997-98 put this figure at 91.8 per cent and 8.2 per cent respectively implying a reduction in the states productive expenditure.
The deficit has progressively risen from Rs 2,836.60 crore in 1991-92 to Rs 6,602.31 crore in 1996-97. It increased by a further Rs 4,421.67 crore to Rs 11,023.98 crore in the revised estimates of 1997-98.
The three major heads of expenses in the state are salaries, loan repayments and state enterprises.
Interest payments and loan repayments in 1995-96 stood at Rs 3,633.92 crore. This increased to Rs 4,509.47 crore in 1996-97 and to Rs 5,222.45 crore in 1997-98.
The state employs about 16 lakh employees, and currently about 15 per cent of the posts are lying vacant. The salaries, allowances and pensions of these employees entails an expenditure of Rs 11,000 crore. PSUs in the state employ about 2.45 lakh employees. The responsibility of paying salaries lies withthe respective PSUs, but lately it has been seen that this is being paid by the state government.
The implementation of the fifth pay panels recommendations will see an additional outgo of Rs 3,000 crore.The revenue receipts of the state in 1997-98 were Rs 7,000 crore, but it spend Rs 11,000 crore on its employees. This situation is attributed to the governments failure hike services charges for utilities like hospitals and schools fees.
In comparison, Tamil Nadu had revenue receipts of Rs 9,500 crore and its expenditure on employees stood at Rs 5,500 crore. The revenue receipts of Andhra Pradesh were Rs 7,500 crore and expenses on employees was Rs 4,500 crore.
The study does not either elaborate on the reasons behind this decline or suggest corrective measures.
