The Himachal Pradesh Government on Saturday said that the State Government was committed to maintain fiscal discipline and to comply with Government of India’s guidelines in undertaking approved borrowings.
In a statement here, a spokesman of the State Government said that the State Government has been managing public finances prudently and the borrowings have been as per approved guidelines given the high growth and developmental initiatives taken by the government for increasing farmer’s income and employment opportunities besides funding pro-poor policies and improving the infrastructure.
“There have been certain reports that the borrowings of the Himachal government were unsustainable and leading to debt trap. These had been quoted selectively from the CAG report on State Finances which were recently laid in Vidhan Sabha,” the spokesman said.
He said these allegations were far away from the actual position and the fact was that the Union and State Governments undertake borrowings as per approved programme to fund essential developmental, capital and social welfare programme.
The Spokesperson said Himachal Pradesh was no exception to this fact and the borrowing of a government could not be looked in isolation.
The CAG report on State Finances for 2014-15, itself has evaluated the debt/borrowings of HP against the Gross Domestic Product (GDP) of the State. The percentage of total liabilities to GSDP, which was 42.48 percent in 2011-12, has actually declined to 39.96 percent in 2014-15. The percentage of Public Debt to GSDP has also come down from 29.36 percent in 2011-12 to 26.92 percent in 2014-15.
“These declining trends in public debt show that HP was not heading towards a debt trap. The borrowings undertaken by the Government have been primarily to finance developmental expenditure, given the rising GSDP of the State. Declining Debt-GSDP ratio is a healthy indication of sound economic and pro-poor policies of the state government,” the spokesman added. He said all loans from open market and financial institutions (negotiated from NABARD) had been raised by the state government after obtaining approval from the Government of India under Article 293(3) of the Constitution. The state government has not made any off budget borrowing in last three years hence there is no question of violation of the Constitution.
The Spokesperson said 2014-15 was particularly challenging year for the State due to sharp decline in central fund/aid to Himachal Pradesh during this year. The 13th Finance Commission gave very less grant and in 2014-15 the Revenue Deficit Grant sharply reduced to Rs.406 crore as against Rs2232 crore being provided in the first year 2010-11 of the Award period.