THIRUVANANTHAPURAM: Centre has termed Kerala one of the most financially unhealthy states with multiple cracks diagnosed in its fiscal edifice. In its counter against the original suit filed by Kerala in SC, Centre has stated the financial stress the state is facing is purely due to its own financial mismanagement and the demand to increase borrowing limits is not for any productive purpose but for managing its day-to-day affairs.
In its reply (accessed by TOI), Centre has stated the outstanding liability as a percentage of the state’s gross state domestic product (GSDP) is increasing consistently from 31% in 2018-19 to 39% in 2021-22, whereas the average of all other states is 29.8% in the same period.
“One of the major consequences of having a high outstanding liability ratio is enhanced outflow in terms of interest payments, which increases the state’s deficit and may result in a debt trap,” Centre said. The committed expenditure as a per cent of revenue receipts has also increased from 74% in 2018-19 to 82.40% in 2021-22, which is the highest for any other state in the country. “High levels of committed expenditure squeeze out the space for productive govt spending, which negatively impacts the state’s growth in the long run,” it said.
The state has a high revenue deficit, which implies state govt is not borrowing to invest in productive schemes, but to meet its day-to-day expenses such as salaries, pensions and interest payment.
In its reply (accessed by TOI), Centre has stated the outstanding liability as a percentage of the state’s gross state domestic product (GSDP) is increasing consistently from 31% in 2018-19 to 39% in 2021-22, whereas the average of all other states is 29.8% in the same period.
“One of the major consequences of having a high outstanding liability ratio is enhanced outflow in terms of interest payments, which increases the state’s deficit and may result in a debt trap,” Centre said. The committed expenditure as a per cent of revenue receipts has also increased from 74% in 2018-19 to 82.40% in 2021-22, which is the highest for any other state in the country. “High levels of committed expenditure squeeze out the space for productive govt spending, which negatively impacts the state’s growth in the long run,” it said.
The state has a high revenue deficit, which implies state govt is not borrowing to invest in productive schemes, but to meet its day-to-day expenses such as salaries, pensions and interest payment.
