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HP entering a debt trap – CAG

Successive governments have changed hands in the hill state from 2008 till date but the revenue position has still not changed. In the recent report by the comptroller and Auditor General of India it was stated that the per capita debt has increased from 40902/- in 2011-12 to 57642/- in 2105-16. This figure of the report clearly signifies that even after a change in government, the financials of the state haven’t improved at all. Rather have deteriorated further by 42 percent which is a big rise.

The citizens of the state who are already awaiting their chances are now under a bigger debt it seems. In the report the CAG clearly said that Himachal Pradesh was ranked 3rd in the highest per capita debt among the eleven special category states of the country. The top 2 being, Mizoram and Sikkim where this figure seems high because of their low population.

In a press brief at Shimla on Friday the Principal Account General stated that Himachal Pradesh if continues on the same path it is likely to fall into a debt trap. Further adding that in 2015-16 the total borrowings of the state were 2450 crores wherein 32% of it was for repayment of debts i.e 786 crores.

He advised the state government to make their investments more productive which are hardly finding any returns currently. As per the Account general the return on investment is close to just around 4.10 percent while the Government paid an average rate of interest as 7.89 per cent on its borrowings during 2011-16, which is a big ambiguity. He said that the dependence of the state government is increasing on the center by every passing year. Adding that major portion (63 per cent) of revenue receipts during 2015-16 came from Central transfers i.e. grants-in-aid (48 per cent) and central taxes and duties (15 per cent).He further also advised the state government to reduce on their expenditure, with some control on the subsidies.

He said that out of Revenue expenditure, committed expenditure consists of interest payments, expenditure on salaries and wages, pensions and subsidies constituted a dominant share at an average of 76 per cent during 2013-16, which is a matter of concern. He informed that the share of State’s own resources (tax and non-taxes revenue) in Revenue Receipts decreased by 8 per cent from 45 per cent in 2014-15 to 37 percent in 2015-16.

 

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