The Comptroller and Auditor General of India (CAG) has warned that Uttar Pradesh is gradually getting into a debt trap due to continued macro-economic imbalances in the state. | |
| In its report for the year ended March 31, 2005, the CAG has given a grim picture of the state's economy, marked by large fiscal and revenue deficits, no return on investments made by the government and an extremely poor ratio of assets to liabilities. |
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| As per the report, the state's revenue deficit for 2004-05 stood at Rs 6,993 crore, which grew 11.23 per cent from Rs 6,287 in 2000-01. Fiscal deficit also increased by 27.71 per cent at Rs 12,997 crore in 2004-05 as against Rs 10,177 crore in 2000-01. |
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| It said, "Large revenue and fiscal deficits year after year indicate continued macro-economic imbalances". |
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| The report also points out that the balance of current revenue continued to be negative during 2004-05, which would "adversely affect the state's plan size and reduce availability of funds for additional infrastructural support and other revenue generating investment". |
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| The CAG has also expressed concern over the fact that the state's economy, marked by large fiscal and revenue deficits, has made no return on investments made by the government and has an extremely poor ratio of assets to liabilities.Returns, even in the previous four years, have been less than one per cent. |
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| Low returns on investments indicate "an implicit subsidy and use of high cost borrowing for investments, which yieldsvery little to the state," the CAG report said. |
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| The CAG has also expressed displeasure over the sharp rise in the state's fiscal liabilities during the last five years. The overall fiscal liabilities of Uttar Pradesh increased from Rs 80,331 crore in 2000-01 to Rs 13,1401 crore in 2004-05. |
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| These liabilities as a ratio of gross state domestic product rose from 44.1 per cent in 2000-01 to 55.8 per cent in 2004-05.Ratio of financial assets to liabilities was low at 0.45 in 2004-05. |
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| A greater part of liabilities is, therefore, without any asset back-up, the report concluded. |
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| "This indicates that either the state has to generate more revenue out of its existing assets or needs to provide from its current revenues for surviving its debt obligations," it said. |
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| State's revenue receipts registered an increase of 18.90 per cent between 2000-01 (Rs 24,743 crore) and 2004-05 (Rs 37,617 crore). |
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| While on an average, only 49 per cent of the revenue had come from the state's own resources, central tax transfers and grants-in-aid together contributed the remaining 51 per cent. Revenue expenditure was also high at 88 per cent of the total expendiure. |
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