UP’s debt burden up 40% in FY 2023-24
Uttar Pradesh debt burden has risen up to a whopping 14% more than the annual budget of Rs 6.90 trillion, which, then compared to the real budget, represents a considerable divergence, and is detrimental to the economy of Uttar Pradesh.
Despite the Reserve Bank of India’s (RBI) assertion that the combined state debt as a percentage of GDP is anticipated to decline to 29.5% in 2022–23 from 31.1% in 2020–21, Uttar Pradesh is predicted to have a debt burden of Rs 7.84 trillion in the following fiscal year 2023–24, which is almost 40% higher.
Anticipated Surge Looms Amidst Populist Policies and LS Election Preparations
Financial experts believe that the debt could increase further due to the impending general elections and the Yogi Adityanath government’s push for populist policies.
The nominal UP Gross State Domestic Product (GSDP) has been estimated at Rs 24.39 trillion in 2023–24, according to the Uttar Pradesh annual budget.
RBI raised concerns about the financial stress that had accumulated and offered solutions for the five provinces with the highest levels of debt.
Despite not being among the most indebted states in India, UP saw its public debt ratio rise past 30% of the GSDP during the pandemic years as a result of challenging economic conditions and weak tax collection, a phenomenon that spread across India and the world after the pandemic.
According to a senior official in the state finance department, “UP had successfully managed the public debt ratio below 30% until 2020–21, but the pandemic caused it to increase to 33.4 percent and 34.2 percent during the 2021–22 and 2022–23 (revised estimates) fiscal years.”
In contrast, it is anticipated that UP will receive roughly Rs 71,200 crore (2.9%) of GSDP in loans from the Centre in 2023–2024 as opposed to Rs 51,860 crore (2.5%) in 2022–2023.
Yogi Adityanath, the chief minister of Uttar Pradesh, claimed that the state’s 6.90 trillion rupee budget was intended to establish the groundwork for the ambitious goal of making UP a trillion-dollar economy by 2027.
“We have allocated budgetary funds to each of the critical areas. To achieve India’s goal of becoming a $5 trillion economy, UP must grow, he emphasized.
According to Yogi Adityanath, his administration followed the rules for budget management and fiscal discipline, bringing the fiscal deficit down to Rs 84,883 crore, or 3.48 percent of the GSDP.
The state administration is reportedly avoiding making necessary payments, such as the old pension plan for public employees because it is mindful of its debt load.
The financial stress, according to a former finance minister, is bound to increase because of the impending Lok Sabha elections. In order to offset the anti-incumbency factor and lighten the burden on the state exchequer, the state government will surely offer sops to a number of socioeconomic groups, said minister.
