Lok Sabha Question No. 1818 (UNSTARRED), answered on 2023-02-13
Subject: Debt-ridden States
Ministry: FINANCE
Asked by: Adoor Prakash

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF EXPENDITURE

## LOK SABHA UNSTARRED QUESTION NO. 1818 TO BE ANSWERED ON MONDAY, 13 th  FEBRUARY, 2023 24 MAGHA, 1944 (SAKA)

## Debt-ridden States

## 1818. ADV. ADOOR PRAKASH:

Will the Minister of FINANCE be pleased to state:

- (a) whether the RBI has suggested to take corrective measures for the five most indebted States including Kerala and if so, the details thereof;
- (b) the current debt to GSDP ratio of all States, State/UT-wise;
- (c) whether the Government is aware of the fact that the total debt of Kerala has increased by 80% in the last five years and the State is facing financial crisis and if so, the details thereof and the reaction of the Government thereto;
- (d) whether the State of Kerala has sought any supportive measures from Union Government to address the said concerning situation and if so, the details thereof and the action taken by the Government in this regard;
- (e) whether aggressive borrowing of States is causing higher debt for the States; and
- (f) if so, the details thereof and the measures proposed by the Government in this regard?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI PANKAJ CHAUDHARY)

- (a) No Sir, no suggestion from  Reserve Bank of India (RBI) has been received in Ministry of Finance regarding corrective measures for the five most indebted States including Kerala.
- (b) As per Reserve Bank of India's report titled 'State finances: A study of budgets of 202223', the State/ Union Territory (UT)-wise details of total outstanding liabilities of States  & Union Territories with Legislature as percent of GSDP at the end of March 2021,  March 2022 (RE) and March 2023 (BE) are given in Annexure .

(c) to (f) All  States  including  Kerala  have  enacted  their  Fiscal  Responsibility  and  Budget Management (FRBM) Act. Compliance to the State FRBM Act  is  monitored by the respective State Legislatures.

No  proposal  has  been  received  in  Ministry  of  Finance  from  State  of  Kerala  seeking supportive measures from the Union Government on account of its indebtness.

Department  of  Expenditure,  Ministry  of  Finance  generally  follows  the  fiscal  limits mandated  by  the  accepted  recommendations  of  the  Finance  Commission  while  exercising  the powers to approve borrowings by States under Article 293 (3) of the Constitution of India. The normal  Net  Borrowing  Ceiling  (NBC)  of  each  State  is  fixed  by  the  Union  Government  in  the beginning of each financial year. Adjustments for the over-borrowing by States during previous years, if any, are made in the borrowing limits of subsequent years.

Instances  of  borrowings  by  certain  State  Public  Sector  companies,  Special  Purpose vehicles  (SPVs)  and  other  equivalent  instruments,  where  principal  and/or  interest  are  to  be serviced out of the State Budgets, had come to the notice of the Ministry of Finance. Considering the  effect  of  bypassing  the  NBC  of  the  States  by  such  borrowings,  it  was  decided  and communicated to the States in March 2022 that borrowings by State Public Sector companies/corporations, Special purpose vehicles (SPVs) and other equivalent instruments, where principal  and/or  interest  are  to  be  serviced  out  of  the  State  Budgets  and/or  by  assignment  of taxes/cess or any other State's revenue, shall be considered as Borrowings made by the State itself for the purpose of issuing the consent under Article 293(3) of the Constitution of India.

The Fifteenth Finance Commission (15 th FC) has recommended Revenue Deficit Grants amounting to Rs. 2,94,514 crore for seventeen States for the five years period from 2021-22 to 2025-26.  Based on the recommendations of 15 th FC, Revenue Deficit Grant of Rs. 1,18,452 crore (including Rs.19,891 crore for Kerala) were released to States in FY 2021-22 and Rs. 79,017 crore (including Rs. 12,076 crore for Kerala) has been released in current FY 2022-23 upto 07.02.2023.

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Annexure referred to in the answer of part (b) of Lok Sabha Unstarred question no. 1818 for 13.02.2023

State/ UT-wise details of total outstanding liabilities of States & UT with Legislature as percent of GSDP at the end of March 2021, March 2022 (RE) and March 2023 (BE)

(Rs. In crore)

|        |                   | (at the end-March)   | (at the end-March)   | (at the end-March)   |
|--------|-------------------|----------------------|----------------------|----------------------|
| S. No. | State/UT          | 2021 (Actual)        | 2022 (RE)            | 2023 (BE)            |
| 1      | Andhra Pradesh    | 34.8                 | 32.8                 | 33.0                 |
| 2      | Arunachal Pradesh | 45.0                 | 41.4                 | 39.7                 |
| 3      | Assam             | 26.4                 | 26.9                 | 27.5                 |
| 4      | Bihar             | 38.7                 | 38.5                 | 38.6                 |
| 5      | Chhattisgarh      | 28.6                 | 26.9                 | 27.1                 |
| 6      | Goa               | 35.2                 | 36.5                 | 39.6                 |
| 7      | Gujarat           | 22.2                 | 20.3                 | 19.5                 |
| 8      | Haryana           | 32.5                 | 29.3                 | 28.9                 |
| 9      | Himachal Pradesh  | 44.0                 | 41.3                 | 41.9                 |
| 10     | Jharkhand         | 36.3                 | 34.0                 | 34.1                 |
| 11     | Karnataka         | 24.4                 | 23.1                 | 23.4                 |
| 12     | Kerala            | 38.9                 | 39.1                 | 39.1                 |
| 13     | Madhya Pradesh    | 29.8                 | 28.0                 | 28.9                 |
| 14     | Maharashtra       | 20.2                 | 18.7                 | 19.0                 |
| 15     | Manipur           | 38.3                 | 38.4                 | 38.3                 |
| 16     | Meghalaya         | 42.4                 | 41.7                 | 42.5                 |
| 17     | Mizoram           | 56.7                 | 55.7                 | 53.1                 |
| 18     | Nagaland          | 50.1                 | 43.5                 | 44.2                 |
| 19     | Odisha            | 26.5                 | 20.1                 | 15.7                 |
| 20     | Punjab            | 48.7                 | 48.4                 | 47.6                 |
| 21     | Rajasthan         | 40.6                 | 38.3                 | 40.2                 |
| 22     | Sikkim            | 30.4                 | 31.1                 | 30.8                 |
| 23     | Tamil Nadu        | 31.5                 | 31.8                 | 32.0                 |
| 24     | Telangana         | 28.2                 | 27.4                 | 28.2                 |
| 25     | Tripura           | 39.5                 | 35.3                 | 34.8                 |
| 26     | Uttar Pradesh     | 36.4                 | 34.5                 | 32.6                 |
| 27     | Uttarakhand       | 32.1                 | 31.6                 | 32.0                 |
| 28     | West Bengal       | 38.2                 | 35.8                 | 35.5                 |
| 29     | Jammu and Kashmir | 32.8                 | 31.9                 | 33.1                 |
| 30     | NCT Delhi         | 1.2                  | 1.8                  | 2.2                  |
| 31     | Puducherry        | 29.6                 | 29.8                 | 32.2                 |

Source: RBI report titled 'State finances: A study of budgets of 2022-23'

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