Maharashtra's debt likely to touch 1.37 lakh crore

The debt burden of the state is the largest in the country, and has nearly doubled in the last two years alone, reports Ketaki Ghoge .

By the end of this year, Maharashtra's debt is likely to touch a whooping Rs 1.37 lakh crore, said finance minister Jayant Patil.

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The debt burden of the state is the largest in the country, and has nearly doubled in the last two years alone.

Patil on Wednesday, attributed rising interest rates on the funds borrowed by the government as the main reason for the increased debt but added that it was no longer a cause of concern.

Pointing to various indicators from the state's eight percent growth rate to its improved credit rating in the last year, Patil said that the state's economy was stabilising.

His department is also preparing a five-year plan to bring down the debt by increasing the revenue collection and keeping expenditure under control.

The government has already managed to bring down the administrative expenditure from 81 per cent to 67 per cent last year.

However, there is bad news for the state just seemingly out of a financial crisis. The government estimates that the cost of 1,246 pending irrigation projects is now at Rs 41,000 crore from earlier estimated Rs 33,000 crore.

And despite the improved credit rating by agencies, the Planning Commission has warned the state of taking further loans, asking it to take a look at its ``indebtness''.

And, by 2008, when the sixth pay commission submits its report, the state will have to cough up nearly Rs 7,000 crore from its revenues every year towards salaries and pension payments.

Finance officials also argue that though the debt of the state is high, its ratio to the Gross State Domestic Product (GSDP) is controlled at below 30 per cent.

``We are moving towards economic stability. In the last three years the state has managed to spent over and above its allocated development expenditure,'' said Patil.