Home Dehradun Govt continues to borrow; development projects affected

Govt continues to borrow; development projects affected


By Arun Pratap Singh

DEHRADUN, 6 Jan: The financial situation of the Uttarakhand Government continues to be in a crisis as it continues to borrow money from the market and other agencies even to pay salaries. Sources in the State Finance Department admitted to this correspondent that government was likely to borrow more than Rs 200 crores as a long term loan and had urged the prospective lenders to file their applications before the Reserve Bank of India for the purpose. With this fresh loan, Uttarakhand is likely to have a debt burden of more than Rs 35,200 crores, thus far.
Ironically, though the development projects are directly getting affected due to the paucity of funds, the government continues to announce populist measures basically to appease the two lakh odd government employees. The latest such announcement of the government is the decision to pay arrears and allowances under the Seventh Pay Commission to its employees. The estimated additional burden on the exchequer is expected to be more than Rs 103 crores. So it can be assumed that the government is borrowing to directly appease its employees in an election year. Usually, such decisions in a year are made post budget, but this year because of general elections, there is a possibility of the Model Code of Conduct coming into force sometime in March and, therefore, the government is also mulling bringing the budget in February, itself. Due to the general elections, the union government is likely to bring a vote on account rather than a full scale budget and the state government in all probability shall not wait for the Union Budget before bringing the state budget this year.
It is pertinent to point out here that the majority of the borrowings by the state government are related to meeting the committed expenditure including salaries and, under the circumstances, development does take a back seat. Apart from an amount of Rs 3509 crores borrowed from NABARD, most of the debt is related to committed expenses of the government. Of course, NABARD loans are related to development and investment. The maximum amount of Rs 20,800 crores has been borrowed by the state from various nationalised banks. The proposed loan is for a period of ten years.
Unfortunately, the State Government has also not been able to take full advantage of Central funds meant for development.
For example, under various Central schemes for urban development, the fund utilisation has been quite poor, so far. For example, even the basic groundwork for the Dehradun Smart City Project has not been completed, as yet. The total plan submission before the Centre under the project has for been only of Rs 245 crores, most of which amount is related to meeting office related expenditure under the project. Other urban development schemes fare no better. Expenditure under the Amrit Yojana has also been poor. The condition of other projects related to other departments is also bad. Economic analysts feel that, given the tight fiscal situation that Uttarakhand is in, it should have taken maximum advantage of central schemes like some states like Haryana, etc., have done.
Another issue of concern is the declining share of the state in GST revenue. The state share of GST has declined from over 40 percent to 34 percent, at present. Speaking to this correspondent, Finance Minister Prakash Pant admitted that the share of the state in the GST had declined but added that the total amount was rising and claimed that the state share would also rise in the coming months.
Pant admitted that the state was borrowing to meet its expenditure but emphasised that the borrowings were well within the FRBM limits fixed for Uttarakhand. He reminded that the state’s FRBM limit was more than Rs 7400 crores, while its FRBM borrowing currently was about Rs 4000 crores only.