New Delhi: Even though the Reserve Bank of India (RBI) has claimed that the collective debt of states as a percentage of GDP is expected to decline to 29.5 per cent in 2022-23 – as compared to 31.1 per cent in 2020-21 – the debt burden Uttar Pradesh’s net worth is estimated to reach Rs 7.84 trillion in the next fiscal year 2023-24 – almost 40 per cent more.
With general elections round the corner and the Yogi Adityanath government pushing populist schemes, financial experts feel the debt could go up further. According to the UP annual budget, the nominal UP Gross State Domestic Product (GSDP) is estimated to be Rs 24.39 trillion in 2023-24.
Interestingly, the estimated public debt of Rs 7.84 trillion is Rs 94,000 crore or nearly 14 per cent more than Uttar Pradesh’s annual budget of Rs 6.90 trillion. Last year, an RBI article expressed concern over the built-up financial stress and suggested corrective steps in the five most indebted provinces.
Although Uttar Pradesh is not among India’s top indebted states, the state saw its public debt ratio exceed 30 percent of GSDP during the pandemic years due to difficult economic conditions and muted tax collections, a phenomenon that is the highest among all-India states. It was also in the global form after the pandemic.
A senior said, “UP had successfully brought down the public debt ratio to below 30 per cent by 2020-21, but it is set to increase to 33.4 per cent and 34.2 per cent during the financial years 2021-22 and 2022-23 (revised estimates) ” State Finance Department officials.
Meanwhile, UP is estimated to receive a loan of about Rs 71,200 crore, 2.9 per cent of GSDP, from the Center during 2023-24, compared to Rs 51,860 crore (2.5 per cent of GSDP) during 2022-23.
According to Chief Minister Yogi Adityanath, UP’s Rs 6.90 lakh crore budget was aimed at laying the foundation for the ambitious target of making UP a trillion dollar economy by 2027.
He underlined, “We have provided budgetary allocations for all key sectors. Uttar Pradesh must grow for India to achieve its goal of becoming a $5 trillion economy.”
Yogi Adityanath said his government followed fiscal responsibility and budget management norms and kept the fiscal deficit at Rs 84,883 crore or 3.48 per cent of GSDP.
The state government is clearly aware of its debt burden and has been avoiding essential payments including the old pension scheme for government employees.
However, a former finance minister said, “The burden of expenditure is bound to increase as the Lok Sabha elections are round the corner. To counter the anti-incumbency wave, the state government will surely announce SOAPs for various sections of the society and it will add burden to the state exchequer.”