GUWAHATI, Jan 18— Over the years the outstanding debt of the State Government has grown enormously and the problem of indebtedness has taken a menacing shape. The total debt stock of the State Government, which was Rs 733.34 crore in 1980-81, increased to Rs 10,013.12 crore by 2000-01. The share of total debt stock in Gross State Domestic Product (GSDP), which was 29 per cent, reached the peak of 41 per cent in 1990-91 and thereafter declined to 24 per cent in 1995-96, but rose to 33 per cent in 2000-01, said the Committee On Fiscal Reforms (COFR) in its report. State Government’s loans from the Central Government constitute the major portion of the State’s public debt, primarily because of larger loan assistance from the Central Government for financing the plan outlays. The share of Central loan in the total debt stock of the State Government was 82 per cent in 1998-99, the report said. The share of Central loans showed a declining trend after 1990-91, as, the benefit of plan assistance, comprising 90 per cent grant and 10 per cent loan, was extended to the State Government since 1990-91. Prior to that, the pattern of assistance was 70 per cent loan and 30 per cent grant. But, inspite of the benefit of plan assistance in the form of 90 per cent grant and 10 per cent loan being extended since 1990-91, short-term loans in the form of ways and means advances and small savings loans, have been continuing to be the major items in the Central loans to the State.
Small savings loans have been increasing enormously as share of Central loans, because the State Government has been providing various types of incentives in the form of lottery and attractive prizes. For example, small savings loans comprising Rs 183.86 crore in 1995-96. It increased to Rs 527.58 crore in 2000-01. Similarly, the short-term loans in the form of ways and means advance, have also increased since the Central Government provides such short-term loans to tide over ways and means problems during the year. For example, in 1999-2000 the Central Government extended a total ways and means advance of Rs 615 crore. In 2000-01, the State Government received a ways and means advance of Rs 200 crore, said the COFR report. Though the share of Central loans in the total debt stock has been declining over the years, the share of internal debt has been rising in the total debt stock of the State. This is, the COFR report said, due to the gradual increase of the share of market borrowing. Since the State Government has to float loans against redemption of market loans, matured during the year, the volume of market loan has been rising gradually. The share of internal debt in the total debt which was 18 per cent in 1980-81, has increased to 46 per cent in 2000-01, the report said.
It appears that the debt accumulation of the State over the period 1994-2001 has been at the average rate of 14 per cent, whereas, the revenue receipts of the State Government has been growing at the average rate of 12 per cent. This clearly indicates that the growth rate of debt exceeds the growth rate of revenue. This phenomenon would inevitably lead to perpetual growth in the debt stock, the COFR report said. Another reason which has contributed to the piling up of debt over the years is that since 1991-92, the State Government has not been making repayment of loans due to the Ministries under the Central Government, other than the Ministry of Finance, in respect of centrally-sponsored, Central sector and non-plan schemes because of financial constraints. Only the Ministry of Finance has been recovering the dues in respect of both principal and interest, regularly at source from the released amounts of Central assistance falling under the Ministry’s domain. But, in respect of the other Central Ministries, there is accumulation of over- dues against loans. Such overdues, including principal, normal interest, stand at Rs 242.30 crore approximately at the end of 2000-01, the COFR report said. In addition to the magnitude of public debt, the contingent liabilities in the shape of Government guarantees have an important bearing on the State finances. The State Government has been providing guarantees against loans, bonds and debentures on behalf of the State PSUs, urban local bodies, cooperative institutions, trade sector, promotional sector, production sector and construction sector. It has also extended guarantees under 100 per cent margin money scheme, against the bank loans of the surrendered militants, the report said.