New Delhi: From collectorate and taluk offices to municipal parks, some states have resorted to raising loans from banks by offering sovereign assets or escrowing their future revenues. hub To raise the red flag, especially in the wake of the Lanka crisis.
Between 2019-20 and 2020-21 at least five states – Andhra Pradesh, UP, PunjabMP and Himachal – future revenue growth, finance secretary TV Somanathan said in a presentation to the chief secretaries last month. More states may have resorted to such means, but the data was not immediately available, sources told TOI.
Escrow refers to giving charge of resources to a third party or banks until a loan or liability is paid. On June 20, TOI was the first to report that the Center has flagged its concerns over high debt levels in some states.
The concern stems from states offering securities to raise debt when they do not have revenue streams, something that the Comptroller and Auditor General has also done in the past.
Experts say that with rising spending, states are increasingly resorting to off-budget borrowing and mortgaging their revenue streams or sovereign assets.
While the Center had massive off-budget borrowing to finance food subsidies, Indian waterlosses and oil bonds, it has sought to clean up its books in recent years. At the same time it is pushing states to be more financially responsible, but is facing political resistance, as was the case on Tuesday when several opposition parties called on the Secretary of Economic Affairs at a meeting of political parties on the Sri Lankan crisis. Ajay Seth had objected to the presentation.
Under the current rules, the Center allows states to borrow up to 3.5% of the Gross State Domestic Product (GSDP), with another 0.5% allowed which is linked to power sector reforms.
Between 2019-20 and 2020-21 at least five states – Andhra Pradesh, UP, PunjabMP and Himachal – future revenue growth, finance secretary TV Somanathan said in a presentation to the chief secretaries last month. More states may have resorted to such means, but the data was not immediately available, sources told TOI.
Escrow refers to giving charge of resources to a third party or banks until a loan or liability is paid. On June 20, TOI was the first to report that the Center has flagged its concerns over high debt levels in some states.
The concern stems from states offering securities to raise debt when they do not have revenue streams, something that the Comptroller and Auditor General has also done in the past.
Experts say that with rising spending, states are increasingly resorting to off-budget borrowing and mortgaging their revenue streams or sovereign assets.
While the Center had massive off-budget borrowing to finance food subsidies, Indian waterlosses and oil bonds, it has sought to clean up its books in recent years. At the same time it is pushing states to be more financially responsible, but is facing political resistance, as was the case on Tuesday when several opposition parties called on the Secretary of Economic Affairs at a meeting of political parties on the Sri Lankan crisis. Ajay Seth had objected to the presentation.
Under the current rules, the Center allows states to borrow up to 3.5% of the Gross State Domestic Product (GSDP), with another 0.5% allowed which is linked to power sector reforms.