New Delhi: Total outstanding liabilities or gross loans of State governments and Union Territories have hit record highs in the financial year 2022-23, showing the latest official data, disclosing that Tamil Nadu has accumulated the highest debt in the country, which has been estimated at over Rs 7.53 lakh crore as per the last financial year’s budget estimate. The state is followed by India’s most populous state Uttar Pradesh which has a debt of over Rs 7.1 lakh crore during the same fiscal.
Other major states that are highly indebted are Maharashtra (Rs 6.8 lakh crore), West Bengal (Rs 6.08 lakh crore), Rajasthan (Rs 5.37 lakh crore), Karnataka (Rs 5.35 lakh crore), Andhra Pradesh (Rs 4.42 lakh crore), Gujarat (4.23 lakh crore), Kerala (Rs 3.91 lakh crore), Madhya Pradesh (Rs 3.87 lakh crore), Telangana (Rs 3.66 lakh crore), Punjab (Rs 3.05 lakh crore), Haryana (Rs 2.87 lakh crore) and Bihar (Rs 2.86 lakh crore).
In response to a question, Finance Minister Nirmala Sitharaman informed the Lok Sabha on Monday that all the states in the country have enacted their own fiscal responsibility and budget management laws. “Compliance to the State FRBM Act, including monitoring of debts of state-owned entities, is monitored by the respective state Legislatures,” Nirmala Sitharaman said in the Lok Sabha. She further said during the last five financial years no nationalised bank has disbursed any loan to any state government.
The data shared by the government in Parliament showed that some states have been doing better than others in managing their finances and they have been following better fiscal policies to reduce their outstanding loans.
For example, Odisha is the only state in the country that has reduced its debt in the last three financial years. Odisha reduced its outstanding liabilities by 1.8 per cent in 2019-20, by 8.4 per cent in 2020-21 and by 12 per cent in the FY 2022-23, a feat no other state government was able to achieve in the last five financial years.
As against this, some states have reported a massive rise in their outstanding liabilities during this period. For instance, the state of Tamil Nadu, which has the highest debt among all the states in the country, reported a double-digit increase in its liabilities during the last five years. The state’s debt burden increased by 22.9 per cent in FY 2018-19, by 15.1 per cent in 2019-20 and then it jumped by a massive 23.1 per cent in FY 2020-21 and then it increased by 15.4 per cent in 2021-22 and by 14.8 per cent in FY 2022-23.
The data also showed that heavily indebted states such as Punjab and West Bengal have been following a pattern as they have been trying to restrict the annual increase in their outstanding liabilities to around 9-10 per cent per year.
The same is the case with India’s most populous state Uttar Pradesh, which has the second highest debt burden in the country, but has been trying to limit the annual increase in its debt burden to around 10 per cent or less during the last five fiscal years. On the other hand, some other states and UTs such as Telangana and Delhi have seen significant annual increases in their debt burden during the last five years.
For example, the annual increase in Telangana’s debt burden has been more than 15 per cent in each of the last five financial years. In the case of NCT of Delhi, the annual increase in the last three financial years has been 161.5 per cent in FY 2020-21, 73.5 per cent in FY 2021-22 and 33.3 per cent in FY 2022-23.
