MANISH GUPTA
Ranchi, Aug 8: Allaying fears related to sustainability of state finances as pointed by a recent Reserve Bank of India (RBI) report, Jharkhand finance department officials say it is not a matter of grave concern and that debt management is already being done.
“We are fully aware about our debt situation and the reasons why it is adding up to Rs 1.09 lakh crore. Loans taken for paying salaries and pensions are bad but not the loans that go towards capital expenditure,” reasoned a senior finance department official.
It may be noted that the RBI recently came out with a study on ‘State Finances and the Risk Analysis’ naming Punjab, Rajasthan, Bihar, Kerala, West Bengal, Andhra Pradesh, Madhya Pradesh, Jharkhand, Haryana and Uttar Pradesh as financially vulnerable.
The officer, speaking on condition of anonymity, said that the state is conscious of the debt burden and is already working on it to bring it to sustainable levels. And, that there is no plan to make sudden changes in the current provisions due to the RBI report.
The debt-GSDP ratio for Jharkhand stood at 34.4 in 2020-2021 and 33.0 in 2021-2022. The state has targeted 27.0 in the budget estimates for 2022-2023. While 25 per cent is considered safe traditionally, Jharkhand government is comfortable below 30 per cent.
“Of the total debt, Rs 76,000 crore is cash loan and the rest are liabilities with no immediate cash outflow,” said the official, adding that the state had to bear around Rs 6,000 crore under the UDAY scheme for financial turnaround of state-run power companies.
However, the fact that Jharkhand has appeared on the watch list of the central bank for risky financial handling has got people worried particularly as the state government recently announced freebies in electricity and higher education worth Rs 6,655 crore.
“Being featured in this list is a matter of concern. There are basically two key indicators in the RBI report – debt-GSDP ratio and interest payment-revenue receipts ratio. On the latter we are safe,” said Harishwar Dayal, Director in Chief, Centre for Fiscal Studies.
The interest payment-revenue receipts ratio for Jharkhand is 8.4 per cent, well below the safe 10 per cent benchmark. With good interest payment capacity and a sinking fund of above Rs 1,000 crore Jharkhand is likely to manage its debt in due course, officials said.
