Ballooning state debt

Populism and profligacy undercut India's fiscal stability

The newly elected government of Uttar Pradesh presented its first Budget last week. There was considerable interest in the run-up to the Budget presentation, given that the Bharatiya Janata Party had promised on the campaign trail to waive off large amounts of agricultural debt and that Union Finance Minister Arun Jaitley had specifically said that the central government would not pay for the loan waiver. The loan waiver might cost as much as Rs 36,000 crore. Since Uttar Pradesh was already deeply indebted — with a state debt-to-state gross domestic product ratio of around 30 per cent — the question