UP government’s indebtedness set to go up three-fold

LUCKNOW: Uttar Pradesh’s indebtedness is set to nearly triple in the span of 10 years, with the state’s borrowings increasing from ₹2,66,820.69 crore in 2014-2015 to ₹8,16,926.02 lakh crore in 2024-2025.
The state’s indebtedness which was 25.6 per cent of the GSDP in 2014-2015 is expected to go up 32.7 per cent of the GSDP in 2024-2025. The state’s indebtedness is expected to remain ₹7,47,545.73 crore on March 31, 2024, which is expected to be 31.7 per cent of the GSDP.
“The rising indebtedness of the state government is not a healthy trend. It builds up fiscal stress and shifts the financial burden to future generations. Ideally, the debt-GSDP ratio should be 20%, as per the Fiscal Responsibility and Budget Management Act (FRBM) committee headed by former revenue secretary NK Singh. In the medium term, the government should aim to bring down the debt-GSDP ratio to 30% by mobilising more resources—both tax and non-tax revenue—through better fiscal management,” said Professor Yashvir Tyagi, former head of the department (Economics), at Lucknow University.
It may be mentioned that the state’s indebtedness has remained about 30 per cent after 2020-2021 in the state. It was less than 30 per cent between 2014-15 to 2019-2020.
The state’s fiscal deficit which was ₹32,513.16 crore (3.40 per cent of the GSDP) in 2014-2015 is expected to go up to ₹86,530.51 crore (3.46 percent of the GSDP) in 2024-2025.
It may be mentioned that the state government has been incurring a large sum from the state budget on payment of salaries, pension and interest. This is considered committed expenditure, and the state government is expected to spend ₹3,21,021.13 crore under this head in 2024-2025, according to the state government’s analysis. It also indicates that the state government would spend nearly 60.3 per cent of its funds on payment of salary, pension, interest and incurring revenue expenditure. This further tightens the state government’s resources leaving lesser funds for development.