Rediff On The NeT Business News: UP's fortunes down: Rs 60 billion is annual interest outgo!


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February 6, 1999

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Debt wish: Rs 60 billion goes down in UP as annual interest!

Uttar is Hindi for north. Pradesh is province. But everything, especially its fortunes and finances, seems south-bound in Uttar Pradesh, India's most populous state.

Heavy borrowings and a Rs 60 billion annual interest burden has pushed the state into a debt trap with slender chances of its coming out .

The revenue deficit touched a dizzy Rs 80 billion this year against Rs 6.05 billion ten years ago, following a widening mismatch between the revenue receipts and expenditure.

Although the revenue expenditure was Rs 275.73 billion this year, the receipts were Rs 204.80 billion, similar to the trend in the last ten years in the politically unstable state.

(Official sources, however, clarified that the figures for the current year were the estimated ones and there might be a slight fluctuation in final conclusions.)

The state currently reels under a debt burden of Rs 500 billion. One third of central loans are utilised exclusively to pay back the outstanding loans which are mounting every year as the administration grapples with a burgeoning revenue deficit, pushing the state further into a debt trap.

Indiscriminate recruitments in government offices by successive regimes during the last decade have put a Rs 160 billion burden of payment of salaries alone.

The situation came to such a pass that the matter came up for a review by Atal Bihari Vajpayee recently. Chief Minister Kalyan Singh sought the Centre's assistance to cope with the crisis.

At one stage, the state administration was left with no option but to siphon employees provident fund money to clear salary bills.

The state government has taken a series of measures to face the situation which is now returning to normal, sources claimed.

A scrutiny revealed that during 1993-98, revenue receipts showed a marginal increase, but the expenditure galloped at a faster pace. During this period, the receipts had an increase of less then 50 per cent while the expenditure registered more than doubled.

Sources said that revenue expenditure in the current year is likely to shoot up by Rs 24.77 billion because the Fifth Pay Commission revised scales compelled the state to give Rs 37 billion as arrears and Rs 23 billion in addition to annual financial burden of Rss 23 billion.

During the year 1997-98, the revenue expenditure boomed to Rs 43.93 billion.

Official sources said during the year 1998-99, the revenue expenditure registered a growth of nine per cent in comparison to the previous year while in 1997-98, the expenditure had gone up by 25 per cent in comparison to the corresponding period in the previous year.

A close look of the state's finances revealed that the state was suffering from financial maladies for the last several years and the revenue expenditure hovered from 87 per cent to 91 per cent during last ten years against the capital expenditure of 13 to 8 per cent which is quite low.

Official sources however say that this year the capital expenditure has jumped to 20.3 per cent, highest during the decade, against the revenue expenditure of 79.7 per cent of the total expenditure of Rs 346.11 billion.

After Vajpayee's recent meeting with Kalyan Singh and his Cabinet colleagues, the Centre agreed to hike in the ways and means advance limit to Rs 5.50 billion from Rs 3.94 billion, payment of Rs 3.50 billion of the special hill advance and release of Rs 1 billion of the Family Welfare Fund of Rs 2 billion.

The state also pleaded for suspension of its loans repayment for at least three years.

The state government has resorted to an austerity drive and all ministers have been directed to deposit 50 per cent of their salaries with the exchequer voluntarily up to end of the current financial year (March 31, 1999).

The ministers in Lucknow have also decided to do away with their escort vehicles. Due to security threat perceptions, most of the ministers move under tight security cover.

A ban has been imposed on foreign trips of the ministers and bureaucrats. During the assembly session from February 9, the food for members will be arranged from the canteen rather than from some department.

The government has directed all officials barring chief secretary, agriculture commissioner, principal secretary (home) to use only one vehicle. The government has also scrapped leave encashment policy for all employees excluding third and fourth class employees.

The government also resorted to additional resource mobilisation and expects to mop up Rs 20 billion by the end of the next year.

UNI

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