The Comptroller and Auditor General of India (CAG) has pulled up Jammu and Kashmir government for its debt situation, stating that the union territory’s overall debt has gone up to Rs 83,536 crore by October 2019.
The CAG expressed concern over J-K government’s action of using borrowed funds for meeting current consumption and repayment of interest on outstanding loans.
“Using borrowed funds for meeting current consumption and repayment of interest on outstanding loans is not sustainable,” it said, stressing that borrowed funds should ideally be used to fund capital creation and developmental activities.
“Outstanding overall debt as on 30 October 2019 was Rs 83,536 crore. The percentage of total debt repayment was 82.68 per cent of the total debt receipt during 1st April 2019, to 30th of October 2019, resulting in only 17.32 per cent total debt receipt available,” latest CAG report said.
The CAG pointed out that government has internal debt amounting to Rs 45,429 crores, which constitute 54.38 per cent of total debt, while loans from government of India amounts to 1,237 crores (1.48 per cent) and liabilities on public account amounts to Rs 36,870 crores (44.14 per cent).
As per the CAG report, the fiscal deficit during 1 April 2019 to 30 October 2019 was Rs 4,728 crore. It can be seen that the market borrowings and excess of receipt over payments under small saving provident fund is major contributor in meeting J-K’s Fiscal deficit.
The report further pointed out that during the period first of April 2019 to 30 October 2019, the net debt available was Rs 1,089 crore. “This was 5.79 per cent of public debt receipt of Rs 18,819 crore during the period”, it said.
During this period, the debt repayment to debt receipts was 83.25 per cent resulting in only 16.75 per cent of debt receipts being available with the government, it added.
The rate of growth of outstanding debt is reflected from statistics as outstanding public debt at the beginning of the year 2019-20 was Rs 43,513 crore, which increased to Rs 46,666 crore at the end of 30 October 2019 showing increase of 7.25 per cent, it said.
The percentage of interest payment to revenue receipt show that during 2019-20, the percentage of interest payment to revenue receipt was 6.87 per cent, it said.
The report said that debt management is the process of establishing and executing a strategy for managing the Government’s debt in order to raise the required amount of funding, achieve its risk and cost objectives, and to meet any other sovereign debt management goals that the government may have set through enactment or any other annual budget announcements.
It said that the total debt of the State Government typically constitutes of Internal debt of the State — market loans, ways and means advances from RBI, special securities issued to national small savings fund and loans from financial institutions, etc., loans and advances from the central government, and Public Account Liabilities
