Bill to Increase Debt to PISG Ratio Submitted to Assam Assembly
Guwahati: Assam’s government on Monday introduced an amendment bill in the Assembly to raise its debt-to-GDP ratio to 32 percent from the current 28.5 percent for the five fiscal years from 2022-2023.
Presentation of the Assam Fiscal Responsibility and Fiscal Management (AFRBM) (Amendment) Bill 2022, on the first day of the Assembly Budget Session, the Minister of Finance Ajanta Neog said the proposals were necessitated due to the impact of the COVID-19 pandemic on state finances.
Due to the pandemic, government own revenue collection has declined in 2020-2021 and the government of Assam has undertaken several capital-intensive projects during the period, according to the statement of objects and reasons for the bill.
The state government manages its development spending primarily through central assistance in the form of grants and capital loans.
As borrowing has increased significantly from the market and other available resources, the debt-to-GDP ratio could rise over the years, the statement said.
The AFRBM law stipulated the ratio of outstanding debt to GSDP at 28.5% from 2014-2015, but it could rise to 26.39% in 2021-22, he said.
The bill proposes to increase outstanding state government debt to 32% of GSDP for the next five years from 2022-23, with the additional fiscal space to be used, if necessary, strictly for investment projects.
The state increased the GSDP’s additional 0.50% borrowing limit based on power sector reforms beyond the prescribed 4% limit for 2022-23, and the new bill proposes to extend it from 2022-23 to 2024-25. .
The Minister of Finance has also introduced the Assam Taxation (Liquidation of Arrear Dues) (Amendment) Bill, 2022′ to restructure certain provisions of the Principal Legislation 2005 with the aim of settling long standing unpaid dues under various tax laws.
The main law, The Assam Taxation (Liquidation of Arrear Dues) Act 2005, was applicable to amounts unpaid up to June 30, 2017, under any provision of the relevant laws passed on or before September 30, 2020.
Through the amendment, it was proposed to extend the period of the main act from March 31, 2021 to September 30, 2022, or such later date as the state government may specify from time to time.
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