Keralas financial debt goes up

Kerala.com News Service
4,September,2009

While in the past, a significant portion of the debt burden went towards the financing of the State Plan, in recent times, a substantial part is being used to bridge the gap between non-Plan revenue receipts and expenditure


Thiruvananthapuram: Keralas financial debt has increased from Rs.11,420.91 crore in 1996-97 to Rs.57,138.71 crore in 2007-08.

The items of debt include borrowing on account of internal debt, treasury savings and provident fund and loans and advances from the Union government.

While in the past, a significant portion of the debt burden went towards the financing of the State Plan, in recent times, a substantial part is being used to bridge the gap between non-Plan revenue receipts and expenditure.

The Balance of Current Revenue becomes negative on account of a higher rate of growth of non-Plan revenue expenditure over the rate of growth of revenue receipts. The increase in Plan size every year results in a higher borrowing for financing the plan.

The growth in debt rate, however, decreased from 9.67 per cent in 2005-06 to 8.59 per cent in 2006-07.

Internal debt continued to grow faster with an annual average growth rate of 25.29 per cent from 1996-97 to 2007-08.

The per capita debt of Kerala was Rs.7,414 in 2001. It increased to Rs.12,681 in 2005 as against the average for all States at Rs.8,343.

The per capita debt in 2005 of Andhra Pradesh was Rs.8,427 followed by Tamil Nadu with Rs.7,782 and Karnataka with Rs.7,446.

When the debt/GSDP (Gross State Domestic Product) ratio of Kerala in 2005 was 42% that of neighbouring States and all States ranged between 27 % and 38%

The gross retention (receipt minus disbursement) and net retention (gross retention minus interest) which were Rs.4,372.72 crore and Rs.573.11 crore, respectively, in 2005-06 declined to Rs.3,946.13 crore and Rs.150.03 crore in 2006-07.

The budget estimate for 2007-08 showed the gross retention as Rs.7,263.52 crore and the net retention as Rs.2,571.47 crore.

Developmental expenditure as a ratio of the GSDP has at the same time been experiencing a major and consistent contraction in the areas of health, education, water supply and sanitation and social services.