Advising Himachal Pradesh Government to review its investments, the Comptroller and Auditor General (CAG) of India has apprehended that Himachal Pradesh may fall into debt trap. Contradicting the claims of Virbhadra Singh Government of taking loans for developmental projects, CAG has said that the State had given less priority to capital expenditure.
In its report tabled in Himachal Pradesh Assembly, CAG has said that the financial liabilities of the State had reached 176 per cent of the total revenue receipts of the State.
Presenting a dismal picture of the financial health of the State, CAG has said that the fiscal liabilities of Himachal Pradesh have increased to `41,197 crore in 2015-16, registering a growth of 8 percent over the previous year,
The State's per capita debt had shown increase from `40,904 in 2011-12 to `57,642 during 2015-16, which shows an increase of 41 percent in five years.
CAG has said that the state was required to repay all its debt in a period of 7 years which was not a comfortable position for the state. The share of closing balance of market loans in the total public debt increased by 1 percent as it was 59 percent in 2014-15 to 60 percent in 2015-16.
The report stated that 32 percent of the borrowings of the state in 2015-16 had gone in repaying the debts, and such a proposition defeats the purpose of taking loans.
The state’s GSDP in 2015-16 at current prices was Rs 110,511 crore. Its literacy rate increased from 76.50 percent (2001 census) to 82.80 percent (2011 census). The per capita income of the state stands at Rs 130,067 in 2015-16.
The CAG has also made comments on state’s inability to file utilisation certificates of funds in time and said that the state could not file 2944 utilization certificates in respect of loans and grants amounting to Rs 2,225.40 crore till March 31, 2016.
The figures presented in the report say that the percentage ratio of capital expenditure to aggregate expenditure is 10.88 in 2014-15 and 11.17 in 2015-16, which is lower than the average ratio of special category states, 15.27 in 2014-15 and 13.95 in 2015-16.
Pointing out flaws in the debt policy of the state, CAG has said that the state agencies had been borrowing at the interest rate of 7.89 per cent during 2011-16, while it was getting returns at the rate of 4.10 percent from Statutory Corporations, Rural Banks etc.