Each Himachal resident is under 47,000 debt!
Each Himachal resident is under a debt of Rs 47,284 and around 40% of what the state produces has to be used to pay debts, an analysis of the state’s finances reveals. The state’s finances have not shown an improvement, even as it was as one of the 11 territories given en a revenue deficit grant of Rs 8,00000 crore per annum by the 14th-finance commission. Its share in shared taxes was also increased.punjab Updated: Feb 19, 2016 11:29 IST
Each Himachal resident is under a debt of Rs 47,284 and around 40% of what the state produces has to be used to pay debts, an analysis of the state’s finances reveals. The state’s finances have not shown an improvement, even as it was as one of the 11 territories given en a revenue deficit grant of Rs 8,00000 crore per annum by the 14th-finance commission. Its share in shared taxes was also increased.
There are reasons for the he state’s precarious finances and especially for the sorry figure of 39.30% of its Gross State Domestic Product (GSDP) — the he value of goods and services produced in the state’s territory — being debt. At the Central level, 21% of GDP is debt.
Though there is no correlation between debt and development, Himachal, thus, falls in the top 10 states in the country — with the highest per capita debt.
The primary reason for the he high debt to GSDP ratio is that Himachal spends 62.72% of its GSDP on salaries, wages, pension and interest repayment. In absolute terms, it spends Rs 8,284 84 crore on salaries, Rs 4,040 on pensions and Rs 152cr on wages. Interest repayment gobbles up another Rs 2,950 crore, with only Rs 2,600cr being spent on major works.
Over the past year, the state has also failed to generate extra revenue (both tax and non-tax) due to several issues, including the global slowdown in power sector that has been one of the major non-tax revenue sources in Himachal. The state has also been complaining about scrapping the the special plan assistance (SPA), special central assistance (SCA) and the normal central assistance (NCA) of around Rs 3,000 crore.
A World Bank report titled — Scaling the heights — has also observed that Himachal has the highest percentage of government or public sector jobs (28%) and the expenditure on this is only likely to soar after the 7th Pay Commission recommendations are implemented.
The 14th financial commission’s recommendations increased the state’s share in the tax cake from 32% to 42% with the absolute number seeing a cut. However, it was still more than what was granted to it under 13th finance commission.
Additional chief secretary finance Shrikant Baldi who has been managing the state’s finances for long told HT, “The state government is focusing on tapping non-tax revenue sources. We will dig out new sources of revenue generation and our efforts will bear results soon.”
Sources added that Himachal chief minister Virbhadra Singh’s decision to open new institutions including educational, health and others across the state has also left a heavy dent on the state’s finances.
“Since there is a limited fund cake, it is dependent upon the government that how much it would spend and on whom,” said a senior government functionary requesting anonymity.
Former planning adviser, who is now a member state planning board, DK Sharma had said during a meeting of the board on February 15 that Himachal must attract more private investment as fiscal space with government would continue to be limited.