Bengal, the most debt-ridden state

HT Corerspondent

Kolkata, Nov. 7 -- Bengal has earned the rather dubious tag of being the frontrunner over other states in terms of its borrowings from the market during the current financial year of 2012-13. From the beginning of the current fiscal on April 1, 2012 till date, Bengal has already borrowed Rs. 12,500 crore, the highest among all borrowing Indian states this year.

Keeping up with its worrying borrowing ways, the Mamata Banerjee government went for fresh borrowing worth Rs. 500 crore on November 6, thus exhausting 55% of its total borrowing limit of Rs. 22,821 crore set under the Fiscal Responsibility & Budget Management (FRBM) Act, 2003.

This further entails that the state government will have to manage with the remaining borrowing amount of Rs. 10,321 crore for the remaining four and half months of the current fiscal.

With chances of getting a nod from the Union finance ministry to borrow above the FRBM limit, bleak, in the light of the current frosty ties between the Centre and the Mamata Banerjee regime, state government sources said that managing the remaining five months would be extremely difficult with the remaining borrowing amount since the obligatory expenditure are maximum in the closing months of any fiscal.

According to state government sources, the fresh borrowing will be utilised for payment of salaries and retirement benefits to state government employees.

In terms of total borrowing so far during the current fiscal, Andhra Pradesh stands second at Rs. 11,500 crore followed by Tamil Nadu at Rs. 10,400 crore and Gujarat at Rs. 10,300 crore.

The last the Bengal government resorted to market borrowing was on October 12, 2012, when it raised Rs. 2,000 crore and even then the state was the highest borrower among the eight Indian states that went for borrowing in that tranche.

Sources from the state finance department said that with the fresh borrowing on November 16, the state would have actually exhausted over 62% of its borrowing limit for the fiscal, had not the Union government recently increased its borrowing limit from the earlier Rs. 20,071 crore to the present Rs. 22,821 crore.

As of March 31, Bengal's total debt was Rs. 2,08,382 crore and considering that the state will exhaust its entire borrowing limit of Rs. 22,821 crore, its total debt burden at the end of the current financial year will be Rs. 2,31,203 crore.

Published by HT Syndication with permission from Hindustan Times.