CAG reveals: State seeks new loan to liquidate debts

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By Our Reporter

SHILLONG, Sep 14: The CAG report has indicated a substantial portion of fresh loans are being utilised towards servicing existing debts which may lead to a debt trap in future.
Debt maturity and repayment profile indicate the government’s commitment to debt repayment or debt servicing.
According to the CAG, the maturity profile of outstanding stock of public debt as of March 31, 2023, indicated that 5% (Rs 2663.25 crore) of the outstanding public debt of Rs 14,383.96 crore was payable during 2023-24 fiscal, 40% (Rs 5,862.87 crore) is payable in the next two to five years, and the remaining 55% (Rs 7,857.84 crore) is to be paid after five years.
“In the coming five years, the state government is required to repay a sizeable portion of public debt, i.e., Rs 6,526.12 crore (45%),” the report said.
The maturity profile and repayment schedule of internal debt and loans and advances received from the Centre along with interest for the next 11 years (2023-24 to 2033-34) were detailed in the report.
As of March 31, 2023, the internal debt (Rs 12,634.54 crore) consisting of market borrowings, loans from LIC, GIC, NABARD, etc., constituted 87.84% of the total outstanding public debt (Rs 14,383.96 crore) and 68.51% of the outstanding public liabilities (Rs 18,442.32 crore).
During the current year, the state government borrowed Rs 1,951.94 crore as market loans and loans from financial institutions and repaid Rs 1,406.88 crore (principal Rs 562.03 crore and interest Rs 844.85 crore), i.e., 72.08% of the total internal borrowings.
“This indicates that a substantial portion of fresh loans are being utilised towards servicing of existing debts which may lead to a debt trap in future,” the CAG stated.
The CAG also indicated that out of total internal debt of Rs 16,883.41 crore (principal Rs 11,883.50 crore and interest Rs 5,008.91 crore) payable by 2033-34, the internal debt of Rs 1,548.68 crore including a principal of Rs 638.69 crore and interest of Rs 909.99 crore will become payable by financial year 2023-24.
Thereafter, in the next three years up to 2026-27, an amount of Rs 6,404.18 crore, which includes Rs 4,093.99 crore as principal and Rs 2,310.19 crore as interest will become payable.
Between 2027-28 and 2033-34, the liability of the state towards principal and interest will be Rs 8,930.55 crore.
“On an average, the state government has to repay Rs 1,680.56 crore of internal debt including interest each year till 2033-34,” the CAG said.

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