The recent Comptroller and Auditor General (CAG) report paints a grim picture of the state’s finances pointing out that Uttarakhand’s total loan liability is Rs 29,836.21 crore of which Rs 16,290.17 crore has to be paid after seven years while Rs 4,469.72 crore is to be paid between the next five to seven years.
The report claims that the state government’s continued dependence on market loans for repaying old loans and spend of capital expenditure has brought the hill state “on the wrong side of the Fiscal Responsibility and Budget Management Act (FRBMA) which disallows both old repayment and capital expenditure.”
“On an average, 28.98 % of the fresh borrowings (from 2011-12 to 2015-16) were utilised for repayments of the matured market loans whereas 71.02 % were used for capital expenditure which is against the provisions of FRBM Act and defeats the purpose of these loans,” the report observed.
The auditors found through the state’s debt profile that there was a marked trend of continued dependence on borrowed funds to tackle fiscal deficit in the last five years. They also pointed out that the slow pace of repayment of external loans will increase the need of rollovers in the coming years and the maturity pressure of existing Market Borrowings (MB) on the Uttarakhand government would also be considerable.
Elaborating on the state’s borrowings, the report says that Uttarakhand has borrowed Rs 11,950 crore from the market and repaid Rs 3,433.53 crore during the period between 2011-12 to 2015-16. A breakup of the loan amount shows that in 2011-12, the state government had taken Rs 1400 crore and paid Rs 240 crore (17.20%) on account of repayment. In 2012-13, Rs 1750 crore was raised and Rs 949.87 crore (54.28%) was used for loan repayment.
In 2013-14, the state took Rs 2500 crore and paid Rs 763.89 crore (30.56%) for loan repayment and in 2014-15, Rs 2400 crore was taken from the market and Rs 308 crore (12.87%) was used for repayment of old loan. In 2015-16, the state government had taken a loan of Rs 3900 crore from the market and paid Rs 1170.19 crore (30%) as repayment of the previous loan.
Finance minister Prakash Pant when asked about the situation acknowledged that the government was aware of the financial position and “the decision to reduce contingency funds by over Rs 200 crore was a step in this direction.” He added that more “stringent measures” would be taken soon.