Debt levels of many States precarious: Crisil

  • September 7, 2021
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Debt levels of many States precarious: Crisil

Subject: Economy

Context:

  • According to a report by Crisil most States have precarious debt levels, which will constrain their ability for higher spending on capital expenditure.
  • Debt for eight States (Tamil Nadu, Andhra Pradesh, West Bengal, Rajasthan, Madhya Pradesh, Uttar Pradesh, Uttarakhand, and Bihar) has surpassed a quarter of their Gross\ State Domestic Products (GSDPs) in the pandemic-impacted fiscal 2021.
  • Only three States (Gujarat, Telangana and Assam) had comfortable debt (that is lower than one fifth of their respective GDP as per the 2017 Fiscal Responsibility and Budget Management/FRBM review committee recommendations) following revised estimates of fiscal 2021. (The review Committee had recommended that debt trajectory for individual states: The Committee recommended that the 15th Finance Commission should be asked to recommend the debt trajectory for individual states. This should be based on their track record of fiscal prudence and health)
  • Four States (Maharashtra, Karnataka, Odisha and Haryana) had debt less than or equal to 25 per cent of their GSDPs, said the report.

Concerns:

  • Rising debt will reduce the space of capex (Capital expenditure).
Debt levels of many States precarious: Crisil economy