HP in debt trap, says CAG

Shimla, Apr 8 (UNI) Painting a gloomy picture for Himachal Pradesh, the latest Comptroller and Auditor General's (CAG) report says that the state was getting into a debt trap with a shrinking asset base and burgeoning fiscal liability that had reached 92 per cent.

The report, which was tabled in the Assembly on the last date of the Budget session yesterday, said the state's fiscal health was debt-stressed and burdened by non-development expenditure.

The CAG's report said the state government was heavily dependent upon the Government of India as grants-in-aid and central tax transfers constituted 60 per cent of the revenue receipts.

The fiscal responsibility of the state increased from Rs 8,621 crore in 2000-01 to Rs 16,533 crore in 2004-05 because of heavy borrowings to meet revenue expenditure.

It said the fiscal liability had already understood to have reached Rs 18,000 crore mark by the end of March 2006 and this was almost double the state's annual budget of Rs 9,000 crore.

The state, despite its best social parameters, has become the most debt-stressed state after Mizoram, the report said.

It has pulled up the state government for failing to meet the targets set by the Eleventh Finance Corporation (EFC) as a result of which it could not avail revenue deficit grant of Rs 414.23 crore.

The government thus relied mainly on high cost borrowings to manage its affairs, resulting in an implicit subsidy of Rs 872 crore.

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