The fiscal health of Himachal Pradesh has deteriorated with overall liabilities at the end of 2019-20 at Rs 62,212 crore that have grown at 14.57 per cent over the previous year, the Comptroller and Auditor General of India (CAG) said on Wednesday.
The total fiscal liabilities-Gross State Domestic Product (GSDP) ratio in 2019-20 increased by 2.31 per cent over the previous year and stood at 37.60 per cent, which was above the target of 14th Finance Commission.
Internal debt of the government increased to Rs 39,528 crore (11.78 per cent) during 2019-20 from Rs 35,363 crore in 2018-19, said the CAG in a report for the year ended March 31, 2020, tabled on the last day of the Assembly session here.
The liabilities consist mainly of internal borrowings, loans and advances from the government of India, receipts from public account and reserve funds, and the assets comprise mainly the capital outlay and loans and advances given by the state government and cash balances.
The report said the maturity profile of outstanding stock of public debt and interest of Rs 62,234 crore (principal Rs 40,572 crore and interest Rs 21,662 crore), as on March 31, 2020, indicated that the annual outgo in shape of public debt repayment and interest will be approximately Rs 6,207 crore during next five years up to 2024-25.
It observed from 2016 to 2020 the state had continuously reported revenue surplus due to increase in central devolutions on the recommendations of 14th Finance Commission.
However, the revenue surplus consistently declined from 2016-17 to 2019-20 (except 2018-19) to Rs 12 crore during 2019-20.
The fiscal deficit (Rs 5,597 crore) was 3.38 per cent of GSDP against the target as per the 14th Finance Commission and Fiscal Responsibility and Budget Management (FRBM) Act of three per cent or less during 2019-20.
The auditor said in 2019-20 the state had negative growth (minus 0.67 per cent) in revenue receipts over the previous year which was a significant reduction from 2015-16 (31.37 per cent).
Only 33 per cent of the revenue receipts came from the state’s own resources comprising taxes and non-taxes, while the remaining 67 per cent was contributed by central transfers comprising the state’s share in central taxes and duties (15 per cent) and grants-in-aid from the government of India (52 per cent).
Himachal Pradesh is a special category state. Accordingly, it is entitled to financial assistance from the government of India in the ratio of 90 per cent grant and 10 per cent loan unlike non-special category states, which get central aid in the ratio of 30 per cent grant and 70 per cent loan.
The social indicators like literacy rate and rate of infant mortality at birth indicate that the state has better literacy rate and infant mortality rate than the all-India average.
The percentage of below poverty line (BPL) population in the state is also well below the all-India average.
However, said the CAG, the growth rate of GSDP in 2019-20 came down to 7.56 per cent, due to decline in growth rate under industry and service sector as compared to 2018-19.
The Compound Annual Growth Rate (CAGR) of its GSDP at current prices for the period 2011-12 to 2019-20 was 10.82 per cent, marginally below the CAGR of SCS of 11.24 per cent.
In 2019-20, there was a decline in the growth rate of the secondary and tertiary sectors against an increase in the primary Sector in comparison with the previous year.
The CAG blamed the alarming deterioration in the financial position to high expenditure on salaries and wages.
The expenditure on salaries and wages increased from Rs 8,174 crore in 2015-16 to Rs 11,742 crore in 2019-20. It increased by Rs 532 crore (five per cent) during 2019-20 over the previous year and consumed 38 per cent of revenue receipts of the state during 2019-20.
The interest payments increased by 34 per cent from Rs 3,155 crore in 2015-16 to Rs 4,234 crore in 2019-20. The increase in 2019-20 over the previous year was Rs 212 crore (five per cent).
The interest payments consumed 14 per cent share of revenue receipts and revenue expenditure.