STATE DEBTS - SORRY STATE OF AFFAIR
By Ruma Dubey
The state of financial affairs in the states of India is not exactly a story for a lazy, balmy afternoon. But no sad story is welcome on any day – be it summer, monsoon or winter. Yet, sometimes, despite the unpleasant taste it leaves in the mouth, it is better to be informed. People like me and you can only watch and see the plunder; all under the garb of doing good for us mere mortals. But we seem to be in a far worse state, given the infrastructure, something as basic as water, electricity and good roads. Yet, the states are spending much more than before, running up gargantuan debts. Heavy debt, extravagant expenses just do not seem to keep up pace with the revenues being earned.
Today we are being taxed much more than what we were even 5 years ago yet the quality of life, in terms of infrastructure provided by the states has deteriorated. There will be a change; as the Tata Tea advertisement says, “desh mein ubaal ayega, soch badlo.” But for now, let us take a look at some of the largest debt ridden states of India. And somehow, if we could have measured the amount of corruption in these states, debt and corruption would have been proportional – high debt- high corruption.
On the website of the Ministry of Finance, the data on state debts and liabilities have been updated only till 2008-09. As per that list, till end of FY09, Maharashtra tops the list of states in India having the highest debt, followed by Uttar Pradesh, West Bengal, Andhra Pradesh, Gujarat. Maharashtra’s debt, then at Rs.171663 crore was almost 13% of the total debt of all states.
There was another set of data published at end of FY10, which put Uttar Pradesh at number one with loans to the tune of Rs 221,000 crore. At number two was Maharashtra with loans of Rs 208,000 crore which at the end of FY12 was estimated at Rs.2,31,000 crore and it will now be paying an interest of Rs.18,000 crore. West Bengal came in third with a loan burden of Rs 192,000 crore. The others were Andhra Pradesh (Rs.126,000 crore), Karnataka (Rs.66,000 crore), Kerala (Rs.65,000 crore), Madhya Pradesh (Rs.56,250 crore), Orissa (Rs.49,004 crore), and Bihar (Rs.45,580 crore).
As per another source of data available in 2011, projections given by the Gujarat State Govt itself, it’s per capita debt is the highest in the country and over the next 2-3 years is expected to go up by a whopping , is all set to rise further by a staggering 50%. Its total liabilities (including public debt) at end of FY11 was at Rs1,13,125 crore on a population of 6.03 crore (Census 2011) and this gives us the per capita debt at Rs.18,760. And the Govt itself has projected that its total liabilities in FY12 would go up to Rs.1,29,446 crore, giving a per capita debt of Rs.21,467. At the end of FY13, total liabilities is estimated to go up to Rs.1,48,213 crore, giving a per capita debt of Rs.24,579.
Per capita debt of India is Rs.32,321; which means every Indian carries on his head a debt of Rs.32,321! Amongst other states, Punjab comes in at Rs.26,000 and Bengal is at Rs.21,000. Mamata Banerjee is asking for interest moratorium because the state has to an outgo of Rs.22,000 crore on interests every year.
With such huge debts, naturally, development has got affected and we see all over the countries, projects half constructed and seemingly abandoned. People have got used to maneuvering their way around such projects but one question which comes to mind is – when most of the projects are implemented on the build, operate and transfer basis, how come the debt burden is only going up? In Maharashtra currently the state of infra is pathetic and yet it is holding the dubious distinction of the state with the highest debt. As mentioned earlier – higher the debt, higher is the corruption of the state. So we know which state now ranks number one when it comes to corruption.
Taxing people for everything, maybe soon for the air we breathe also will not solve this problem. Unless development happens, this vicious cycle of debt will suck in everything, like a whirlpool. Maharashtra is precariously close to this huge whirlpool. But with the ministers now post the fire at Mantralaya, work will legitimately not get done.