From compensating Rs 50,000 crore dues to state govts on CST cut to clearing Rs 200,000 crore NPAs in the banking system, it faces a herculean task of bringing the economy back on track.
Whoever forms the next government at the Centre faces a huge challenge of bringing the economy on track as it will inherit from the UPA government a fiscal situation overloaded with liabilities.
Taken together, deferring of the central sales tax compensation, payables to oil marketing companies and bank bad loans in the banking system, will translate into a Rs 285,000 crore liability for the next government.
The first and the politically sensitive liability will be the payout worth Rs 50,000 crore on account of compensation for the central sales tax (CST) to the state governments.
A finance ministry official told dna, "A 2% cut was introduced in the central sales tax as a part of gradual phasing out of the tax before implementation of the goods and services tax (GST). The states were to be compensated by the central government for the losses incurred by them. But the central government has not paid the compensation for the last three years."
That amount has now swelled to Rs 50,000 crore.
"It is for the next government to resolve the matter between states and the Centre. This involves a timeframe and a proper mechanism to be set up," the official said.
Sources claim that owing to the non-payment of the compensation, the central government lost its credibility among the states, which did not come forward on the important tax legislation such as GST.
Another liability which the UPA government has silently put on the shoulders of the next government is payables worth Rs 35,000 crore to the oil marketing companies. In the account books, this amount has been carried forward to the next financial year.
The UPA government will hand over a banking system sitting on a Rs 200,000 crore NPA pile. The NPAs essentially are the bad debts in the banking system. The NPAs in the banking system has grown from Rs 68,220 crore in 2008-09 to Rs 194,000 crore in 2012-13.
The official said, "With this kind of bad debt on their books, banks will find it difficult to fund mega infrastructure projects as they will have a limited appetite for such projects."
The next government will have to find a lot of resources for the public distribution subsidy as well. Out of the total Rs 115,000 crore for the food subsidy, the government has allocated Rs 88,500 crore to the Food Subsidy Act.
This leaves a deficit of about Rs 80,000 crore for the other aspects of the public distribution system, which has not been accounted by the finance ministry.
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