State being plunged into bankruptcy, says Khadse
Opposition leader in the assembly Eknath Khadse alleged that the debt-ridden state’s finances were so bad that it had to take an overdraft of Rs 1,000 crore in the year 2010-11.mumbai Updated: Mar 30, 2011 01:42 IST
Opposition leader in the assembly Eknath Khadse alleged that the debt-ridden state’s finances were so bad that it had to take an overdraft of Rs 1,000 crore in the year 2010-11.
Khadse made this serious allegation on Tuesday while initiating the debate on the state budget.
He said the state’s debt burden was increasing every month and very soon the government would not be able to raise any further debt. So far, the state debt is expected to be Rs 2,26,926 crore this year.
Overdraft happens when one withdraws the money from his/her bank (in state’s case the Reserve Bank of India) when available balance is below zero. In such situations, banks charge extra interest and additional fees from the customer.
Khadse said the state’s policy statement on the Fiscal Responsibility and Budget Management (FRBM) rules showed that it took an overdraft of Rs 1,000 in the year 2010-11.
The BJP leader countered chief minister Prithviraj Chavan’s statement on the budget day that the debt burden was comfortable to service and the state had ensured the mandatory ratio of the debt with the overall income (GDP).
Khadse said the said ratio did not match the banking norms.
“The debt is 26% of the GDP and hence our finances are very bad.”
As projected in the state’s economic survey last Tuesday, the state will spend 70% of its income on establishment and repayment of debt leaving a mere 30% for planned development.
Finance minister Ajit Pawar will reply to Khadse’s charges when the budget debate concludes in later weeks.