Gujarat, the 'Growth Engine of India' as chief minister Narendra Modi likes to describe the state, has been clocking rapid growth in the past decade, but the state government has been unable to check the ballooning debt, which has gone up by almost three times in the last 10 years.
From Rs45,301 crore at the end of 2001-02, the state's debt rose to Rs1.17 lakh crore in 2010-11 and is projected to reach Rs1.29 lakh crore by the end of the current financial year.
The state's debt is projected to rise to Rs1.48 lakh crore by the end of 2012-13 and further to Rs1.69 lakh crore in 2013-14. With the rising debt, the state's interest outgo has also shot up in recent years.
MM Srivastava, additional chief secretary, finance department, said, that the state's debt was well within limits prescribed under The Fiscal Responsibility and Budget Management (FRBM) Act and guidelines set by the 13th Finance Commission. "The state's debt has gone up in absolute terms in recent years, but it has come down in terms of percentage of Gross State Domestic Product (GSDP), which is the key indicator," Srivastava said.
Finance minister Vaju Vala, who has headed the finance ministry for more than a decade-and-a-half, could not be reached for comment in spite of several attempts.
According to official figures, Gujarat's GSDP is projected to increase from Rs1.33 lakh crore in 2001-02 to an estimated Rs5.80 lakh crore in 2011-12. The state's debt and GSDP ratio, which stood at 1:3 in 2001-02, is projected at 1:4.5 for the current year.
While officials attribute the state's increased debt to higher spending on developmental and social sector schemes, the Opposition Congress blames the spiraling debt to corruption, mismanagement and financial indiscipline.
"The state government has been spending hundreds of crore of rupees every year for Utsavs, and now fasts. Instead of being used for development or productive purposes, a large chunk of the state's revenues go towards debt servicing," said Gujarat Congress president, Arjun Modhwadia. He pointed out that the state's total debt was less than Rs10,000 crore when the BJP came to power in Gujarat in 1995.
However, experts say that concerns over the state's debt are misplaced. "The concerns are misplaced, as the state's debt is well within permissible limits," said Ravindra Dholakia, professor in Economics at IIMA. He, however, conceded that the state's interest outgo was marginally on the higher side.