Southern States - Kerala   

State's debts continue to shoot up

By P. Venugopal

THIRUVANANTHAPURAM Dec. 28. Interest-bearing debts of the State Government have gone up by a staggering Rs. 10,000 crores since the UDF came to power and in spite of the various belt-tightening measures announced.

Sources told The Hindu that the debts were now in the region of Rs. 33,000 crores, up from the level of Rs. 23,000 when the LDF left office two-and-a-half years ago.

As per the details furnished to the Twelfth Finance Commission, which visited the State last week, the interest-bearing debt of the State Government on March 31, 2003 was Rs. 31,060 crores.

The liabilities further increased to around Rs. 2,000 crores between April and December, according to a top official.

The debts have been going up during the last seven years.

On March 31, 1996 the amount was Rs. 10,113 crores and the annual interest burden then was Rs. 924 crores. The interest burden now would be more than Rs. 3,150 crores.

"The situation, which was manageable, has become disturbing and will become unsustainable unless some bold corrective measures are taken," says the report submitted by the State Government to the Finance Commission.

The report notes that the starting point of this growing indebtedness was the non-Plan revenue deficit from early 1980s. Instead of being corrected, this was allowed to grow.

Reductions in the State's share of Central devolution in successive Five-Year Plans compounded the issue.

While the revenue expenditure component of the State Plan was over 50 per cent and was growing, the Central assistance to the Plan was being given in the ratio of 70 per cent loan and 30 per cent grant, which meant that a sizeable portion of the loan assistance went to meet the State's revenue expenditure.

Sources said that, since the UDF assumed office, the Government had to honour some payments of the previous regime, besides correcting Treasury adjustments done without following the accepted accounting practices.

This resulted in starting off with a setback of Rs. 2,700 crores.

Only the remaining portion of the Rs. 10,000-odd crores of additional debts picked up during the last two-and-a-half years is, therefore, attributable to this Government.

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