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CAG Flags Tripling of State Debt to Rs 59.6 Lakh Crore, Raises Concern Over Borrowing for Current Spending

CAG finds many states divert borrowings to meet current expenses, signaling strain on fiscal sustainability.

CAG: States' salary, pension, interest burden up 2.5 times in 10 years
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Overview

  • Total public debt of 28 states reached Rs 59,60,428 crore in FY2022-23, equal to 22.96% of their combined GSDP, up from Rs 17.57 lakh crore in 2013-14.
  • Eight states carried liabilities above 30% of GSDP, led by Punjab at 40.35%, followed by Nagaland at 37.15% and West Bengal at 33.70%, while Odisha was lowest at 8.45%.
  • In FY2022-23, capital outlay was lower than net public debt receipts in 11 states, indicating part of the borrowings financed revenue expenditure rather than asset creation.
  • Committed outlays on salaries, pensions and interest rose 2.49 times over the decade to Rs 15.63 lakh crore; together with subsidies and grants, these items made up more than 83% of revenue spending in 2022-23.
  • Congress cited the report to accuse the Centre of coercive federalism over cesses and GST compensation, with no new central policy response noted in the coverage.