Finance is nothing but balancing act between the “ Receipts and Payments “, this balance shall not be slipped at any cost and at any point of time. In this balancing process “ Debt “ plays a crucial role, as everybody knows that in the Debt portion of Receipts or Collections is repayable with interest or dividend in the future as debt services including the applicable interest, whether it is Governments, Corporates or Individuals that should be honoured, as per the terms and conditions stipulated between lenders and lendees subject to enforceable legal obligations on the defaults. In the case of Governments ( Central or States ) in our country, Fiscal Responsibility and Budgetary Management ( FRBM ) Act enacted in order to adhere the fiscal prudence in the Debt management and control for smooth functioning the Government in a systematic and sustainable manner to maintain the inclusive growth and development of our Nation.
Prime Minister Narendra Modi ji vision is “Vikasit Bharat 2047 “ emerge Bharat as the Viswa Guru with 30 Trillion Dollars Economy at average 8 per cent Growth Rate after considering Inflation, in this line many State Governments have been prepared the road maps to make the respective State as part and parcel as per the vision of the Narendra Modi ji led Union Government like Chief Minister Chandrababu Naidu led Andhra Pradesh’s vision document of “ Swarnandra 2047 “ with a vision of 2.4 Trillion Economy at average 15 per cent Growth rate after inflation.
If we analyse the past 10 years of Narendra Modi ji led Union Government, on the one hand there has been systematic approach in the implementation of the policies in the form of structural reforms in Automobile, Textile, NBFC, Banking, Green and Renewable Energy and on the other hand huge amount of new National Highways, Rail lines and upgradation of Railway Stations, Airports,Seaports and the logistics infrastructure and 111 Lack Crore National Infrastructure Investment Pipe line through “ Gatishakti Yojana “ to build the world class infrastructure in our country to lead the steps towards “ Vikasit Bharat “.
Facts reveal the truth, even COVID 19 lockdown uncertainties had converted as opportunities by the Narendra Modi ji led Union Government with the objective of “ Atmanirbhar Bharat “ along with the 40 Lakh Crores DBT transfers for the eligible beneficiaries and Construction of 3 Crore houses for the poor had completed and aims to provide further 3 Crore houses in addition to the already completed, 100 per cent Electricity for all house holds and 100 per cent safe drinking for all rural house holds in the country.
It is very clear, Prime Minister Narendra Modi ji had laid a solid path for the journey to attain “ Vikasit Bharat 2047 “ for last 10 years. At this juncture, apart from the setting up ambitious goals that there is very much required to address the handling the “ National Debt 182 Lakh Crores with debt-to-GDP ratio in India was around 84 per cent including the external debt around 20per cent by March 2025 as per the projection, significant raise from pre-pandemic levels, where the ratio was around 69 per cent upto 2018. In which, State governments also contribute significantly huge portion to the national debt, accounting for on average 34per cent of the total public debt ( varies from State to State due to their performance and prevailing conditions) with outstanding liabilities were
Rs 182.2 lakh crore at the end of FY24. Though United States and Japan, which have debt-to-GDP ratios of 121 per cent and 251per cent, respectively, much higher than our country, we need to pay special attention to control it for the future of our Nation keeping in view of the current scenario and future.
As per the NK Singh Committee recombinations, general Government Debt to GDP Ratio should not be beyond 60 per cent ( 40 per cent for Central Government and 20per cent for State Government ) in the implementation of the Fiscal Responsibility and Budgetary Management ( FRBM ) Act. The then Finance Minister late Arunjaitly had recommended the Public Debt Management Agency ( PDMA ) very long back prior to 2019, But it hadn’t happened reality. Now, Central and State Governments lost control post COVID 19 pertaining to the Borrowings. Most of the State Governments like Punjab and Andhra Pradesh has been gone out of control during the period between 2019 – 24. Especially, Andhra Pradesh Debt to GSDP reaches beyond 45per cent, if we calculate as per the facts.
I requested Honourable Union finance minister on November 26, 2023 by adressing in a letter to take the necessary action for streamlining the State Governments Finances with proper stringent provisions on excess borrowings beyond the Net Borrowing limits as per FRBM and Borrowings with guarantees of the State Government through Corporations and SPVs without own revenue for them, But serving the interest and instalments of these Debts through the “ Consolidated Fund “ in violation of the Article 293(3).
I was stressed in my letter to the Union Finance Minster about the Social and Political systems along with the attitude of the many State Governments that I have been observed as a full time politician for 16 years and Chartered Accountant for 22 years that Whatever the party does run the Government, they have been giving priority for appeasement of voters in all the means without the productive outcome for the State and Nation, it creates burden on the public exchequer. This kind of governance create problems for next generation for managing the people at present for the short term political gains without the future outlook.
Fact is, Punjab is the highest burden off Debt to GSDP ratio in the country and Andhra Pradesh has become much more dangerous than any other state in the country after adjusting all the illegitimate financial practices have been exercised by the State Government in violation of provisions of FRBM and Article 293(3) between 2019 and 2024. Our Bharath has already reached as 4 Trillion Economy and wishing to reach 5 Trillions Economy by next 2 years with the relentless efforts of the Union Government at this point of time. As a part of the Good governance that need to address to curb the irresponsible acts causing unproductive debts with stringent penalty provisions for safeguarding the future generations of our Nation, Otherwise similar financial practices implement many States for the appeasement politics for short term gains that may hurt yours dream “ Bharath emerges as Viswa Guru “ in Amrit Kaal.
In order to make Bharath as Viswa Guru, We need the prudent financial practices from all the State Governments uniformly. For the sake of it, I suggest yours good office to incorporate “ CENTRAL DEBT REGULATORY AUTHORITY “ as a Body with the Central and State Governments with a proper structure with stringent guidelines and provisions to curb the unproductive expenditure and diversion of funds by the State Governments. This Body shall function independently with experts and professionals along with the Central and State Governments to regulate the Borrowings of the States to utilise the funds properly.
State Governments financial practices impact the respective state as well as country’s economy and conducive investments attraction to create the all kind of job opportunities for the people of our country, most particularly youth. If States prosperous, that contributes to build the national economy as per the aspiration of dynamic leadership vision of Prime Minister Narendra Modi for the benefit of the future generations. Hence, working mechanism of “Central Debt Regulatory Authority ( CDRA )“ for the benefit of our Nation is the need of the hour.
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