Assam Assembly briefed on 103% debt surge, CAG warns of fiscal risks
A CAG report revealed that Assam's debt-GSDP ratio climbed to 25.77%, with a growing reliance on open-market and off-budget borrowings
Guwahati, Nov 30: Outstanding debt of the State rapidly increased by 103.34 per cent from Rs 72,256.52 crore in 2019-20 to Rs 1,46,927.84 crore in 2023-24. The outstanding liabilities/GSDP ratio increased from 20.83 per cent in 2019-20 to 25.77 per cent in 2023-24 due to increased borrowings from the open market, a CAG report laid in the State Assembly today stated.
In view of the increasing growth rate of its public debt, the State government may make efforts to augment its own revenues and manage its revenue expenditure efficiently so as to avoid pressure on repayment of public debt and interest liabilities on public debt in forthcoming years, the audit report recommended.
The rising trend in debt-GSDP ratio observed in 2022-23 and 2023-24 indicates that the State requires persistent spending restraint and increase in growth boosting expenditure to reduce its reliance on borrowings, which could help the State to reduce its fiscal deficit relative to GSDP, thereby stabilizing the debt-GSDP ratio in medium term, it suggested.
Internal debt of the State government increased by Rs 59,342.39 crore (112.75 per cent) from Rs 52,630.27 crore in 2019-20 to Rs 1,11,972.66 crore in 2023-24. Fiscal deficit of the State ranged between 3.56 per cent and 6.31 percent of GSDP during 2019-24.
Some off-budget borrowings like Rs 2193.13 crore from NABARD by Assam Infrastructure Financing Authority were not reflected in the fiscal deficit and they represent deferred liabilities of the State and impact long-term debt sustainability. Continued reliance on such borrowings without transparent disclosure may understate the State's true-debt position and limit future fiscal flexibility.
The audit further observed that the State government has to repay 18.56 per cent (Rs 45,458.41 crore) of its public debt (including approximate interest) within the next three years, 18.69 per cent (Rs 29,763.68 crore) between 3-5 years, 21.39 per cent (Rs 34,061.74 crore) between 5-7 years and 30.68 per cent (Rs 48,849.60 crore) between 7-10 years. It signifies that the State has to repay 99.32 per cent of the debt and interest thereon in the next ten years.
"The bulk of repayment obligations occur in the 3-10 year range, which accounts for 70.76 per cent of the total debt re-payment obligation. This highlights the need for careful cash flow planning and resource allocation during this period," it recommended, noting that the repayment peak during 7-10 years underscores the need for enhanced revenue mobilisation or refinancing strategies.
The CAG further observed that the reliance on domestic borrowing mechanism underscored the importance of prudent debt management strategies to mitigate repayment risks