HP’s outstanding debt on GSDP well above target set by 15th FC:CAG
According to a CAG report, Himachal Pradesh’s debt stock to the state’s gross domestic product (GSDP) is well above the target set by the 15th Finance Commission (FC).
The Comptroller and Auditor General (CAG) of India, in his report, tabled by Chief Minister Jai Ram Thakur before the Assembly on Saturday, said that the ratio of total debt stock to GDP, which stood at 42.91%, was above the target set by the 15th Finance Committee (36%).
The CAG report for the year ending March 31, 2021 further stated that the state government passed the Himachal Pradesh Fiscal Responsibility and Fiscal Management Act (HP-FRBM) in April 2005 and provided for quantitative objectives to be met by the State with regard to measures of deficit and levels of indebtedness.
The HP-FRBM law was to be amended to prescribe revised targets for deficit and debt levels. However, the state government did not do the same, he added.
Against the revenue surplus maintenance target prescribed by the 15th Finance Committee (FC) and in the HP-FRBM Act, there was a revenue shortfall (Rs 97 crore) in 2020-21. The GSDP’s actual budget deficit at 3.64 percent remained within the FC 15 target, but exceeded the targets set in the FRBM law, he added.
In the year 2020-21, there was a revenue shortfall of Rs 97 crore, compared to a revenue surplus of Rs 12 crore in the previous year. The budget deficit (Rs 5,700 crore) increased by Rs 2,103 crore from the previous year (Rs 3,597 crore). The primary deficit fell to Rs 21,228 crore in 2020-21 from Rs 1,363 crore in 2019-20, he added.
In the year 2020-2021, there was an increase of 8.77% (Rs 2,695.86 crore) in tax revenue from the previous year, but only 31% of tax revenue came from resources state’s own comprising taxes and non-taxes, while the remaining 69% was provided by central transfers comprising the state’s share of central taxes and duties (14%) and grants from the Government of India (55%), he added.
Total expenditure increased by Rs 7,031.31 crore (21.88%) over a five-year period (2016-21). During 2020-21, the total expenditure (Rs 39,164.25 crore) of the state increased by Rs 2,801.70 crore (7.70%) during the year 2019-2020. The share of revenue expenditure in total expenditure ranged from 78.9% to 86.7% during the 2016-21 period, he added.
The growth rate of revenue expenditure showed a fluctuating trend over the same period. Committed expenditure accounted for a dominant share (67-71%) of state spending and revenue (65-70%) during the 2016-21 five-year period, he added.
Current 2020-21. capital expenditure (Rs 5,309 crore) increased by Rs 136 crore (2.62%) compared to the previous year 2019-20 (Rs 5,174 crore) and constituted 13.56% of total expenditure against 14.23 % in 2019-20, he added.
The overall fiscal liability at the end of the year was Rs 67,164.75 crore, after excluding Rs 1,717 crore received as back-to-back loans from Gol State in lieu of GST offset deficit , he added.
These had increased by 7.96% in 2020-21 against 14.57% the previous year. The ratio of fiscal liabilities to GSDP in 2020-21 was 42.91% (calculated by excluding Rs 1,717 crore received in back to back loans), it added.
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