The 15th Finance Commission asked the UP government to substantially bring down the debt level to 25 per cent of gross domestic state product (GSDP) by enhancing annual economic growth and efficiency. The debt burden on the state is likely to cross the Rs 5 lakh crore mark by the end of current fiscal. Speaking to newspersons in Lucknow on Tuesday, Finance Commission chairman NK Singh said, “UP government needs to substantially bring down the debt burden to 25 per cent of the GSDP by increasing annual growth rate.’’
Asked about the possible relief by the finance panel to bail out the public finance of UP, the chairman said, “The commission always reserves the best for the last.’’
UP is the 27th state to be visited by the commission and it will also visit Goa and Jammu and Kashmir. The Finance Commission had a long discussion with Chief Minister Yogi Adityanath and his cabinet colleagues in Lucknow on Tuesday.
The commission was concerned about the rising outstanding debt to GSDP Ratio, on compliance with state’s Financial Responsibility and Budget Management Act and declining capital expenditure. The state is exhibiting a rising trend in its outstanding debt to GSDP which has increased from 31.57% in 2012-13 to 34% in 2017-18.
During 2017-18, there was an overall decrease in capital expenditure of Rs 30,701 crore (44 per cent) over the previous year, mainly due to reduction in expenditure under roads and bridges, power, food storage and warehousing and major irrigation projects.
There is also a high burden of pension and interest on the state due to 7th Pay Commission. Besides, state PSUs have been suffering increasing losses. Of the 107 PSUs, accounts of 100 PSUs are in arrears. Losses of working PSUs and corporations have increased from Rs 62,901 crore in 2012-13 to Rs 125,325 crore in 2017-18.
In spite of the fact that significant investment has been made by the state g government in power sector PSUs, losses have peaked from Rs 11,829 crore in 2012-13 to Rs 18,415 crore in 2017-18.
In the implementation of UDAY Scheme in DISCOMs, the state has achieved 100% progress in Feeder Metering and Rural Feeder Audit. However, the state’s performance was not satisfactory and was way below targets for parameters like bringing down aggregate transmission and distribution losses and metering of rural connections, and smart metering.
The Finance Commission chairman pointed out that though the state has shown significant improvements in key outcomes of health and education, UP lags behind in infant mortality and low rate of institutional delivery of pregnant women as compared to the all-India average. He said the UP government needs to make efforts to bridge this gap.
The commission was appreciative of the fact that the state has shown improvement over Sustainable Development Goal–I and poverty in UP has declined from 40.9 % in 2004-05 to 29.4% in 2011-12.
The GSDP growth has been in line with the GDP growth in the past years. The trend growth rate of the state in 11.09% during 2011-2018 whereas GDP at current prices had a trend growth rate of 11.56% in the same period.
Net earnings of UPSRTC have started moving to a positive trajectory from 2017-18. There have been significant improvements in earnings per kms and significant reductions in cost per km.
According to Forest Survey of India, the state has shown 1.51% increase in forest cover in 2017 as compared to 2015, which indicative ofthe state’s commitment towards maintaining ecological cover.
Also, there has been substantial progress in development of Integrated Financial Management System (IFMS) in the state. The Finance Commission chairman concluded that if India had to achieve the 5 trillion USD economy, it was not possible without making the size of UP economy to USD one trillion.