Himachal lost Rs 65.75 Cr on account of debt wavier: CAG


By: ML Verma

Shimla (Apr 13): Farming activities in Himachal Pradesh suffered another setback as the state lost Rs 65.75 crore on account of state government’s failures to get this amount release from the Center as ‘debt wavier’ for the financial year 2008-09 and 2009-10.

The report of Comptroller and Auditor General of India (CAG) on the state finances for year ending March 31, 2010, highlighted that the state did not get Rs 65.75 crore from the Center in FYs 2008-09 & 2009-10. The amount was not handed over to the state as it did not fulfill the 12th Finance Commission recommendation targeted to achieve debt stock of 25 per cent of GSDP by 2014-15. Himachal has not even been able to achieve a target of 31 per cent as recommended by TFC and its debt stock as on March 31, 2010, stood at 56 per cent of GSDP. Moreover, fiscal liability increased by nine per cent over the previous year.

The CAG report advised the state government to gear up its activities so that at least the target set out by the 12th Finance Commission could be achieved. In May 2005, the state government enacted Fiscal Responsibility and Budget Management Act (FRBM) to ensure the prudence in fiscal management and fiscal stability by progressive reduction in revenue deficit. FRMB was for prudent debt management, consistent with fiscal sustainability, greater transparency in fiscal operations of government and conduct of fiscal policy in a medium framework.

The Act prescribed targets to reduce revenue deficit as a percentage of total revenue receipts by at lest two percentage points each financial year, compared to previous year, progressively reduce fiscal deficit to bring it to three per cent of GSDP, to reduce its outstanding guarantees on long term debt, until it can cap outstanding risk weighted guarantees at 80 per cent of the total revenues receipts in the proceeding finical year.

However, CAG is silent over the impact of non-issuance of funds for debt waiver and its further impact on the number of farmers who did not benefit as about 45% households in the state depend on agriculture directly and indirectly. The state farming sector is facing acute problem of monkey menace and low productivity.

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