The debt burden is threatening to cross Rs 30,000 crore by the end of this fiscal and the current salary bill, pension and interest payment on loans is 77 per cent of the states annual expenditure.
The biggest headache for the state is the burgeoning debt burden, which according to the finance departments projection is likely to reach Rs 32,512.34 crore by the end of 2004-05 fiscal. The debt burden includes Rs 14,595 crore from the Centre and Rs 7,530.14 crore from the open market. The loan burden reached Rs 28,001.71 crore by 2003-04-end.
As only a vote-on-account has been passed for the first four months of the current financial year because of the Lok Sabha and assembly polls, the government is likely to face a difficult year ahead on financial matters. The plan outlay for the year is yet to be finalised and resource mobilisation is yet to gain momentum.
To make matters worse, with a government headed by a rival political party at the Centre, the state may not get the kind of support it was getting earlier. Mr Ghadei seems to be quite aware of the new problems and has called upon his officials to bring in some fiscal discipline for the battle ahead. He says that the economy is heading in the right direction.
Mr Ghadeis confidence stems from the fact that the states finances showed some good signs in 2003-04. The opening deficit for 2004-05 has been pegged at Rs 343 crore, which is about Rs 20 crore less than the last year. However, in real terms, the opening deficit was less by over Rs 865 crore as the state had additional resources of Rs 845 crore from the Centre and other sources in 2003-04. While the Centre provided Rs 620 crore as medium-term advance, DFID disbursed a grant of Rs 225 crore in March 2004.
However sources say what is more significant is that the state, unlike recent years, has managed its finances without getting any advances from the Centre. There have been some major improvements on the ways and means and overdrafts, says Pramod Kumar Mishra, the finance department special secretary. Earlier, the state used to depend on ways and means and overdraft for as many as 363 days in a year. However, this has come down to 152 days in 2003-04 from 169 days the previous year. Similarly, the overdraft period has come down to 169 days in 2003-04 from 189 days the previous year. The state had made substantial savings in interest on this account.
On the other side, the revenue collection has improved. The revenue collection registered a growth of 12 per cent as compared to 2002-03. While the total tax and non-tax resources was Rs 3,833 crore in 2002-03, it went up to Rs 4,294 crore the next year. However, the new finance minister and his officials will face the real test from June onwards as the state would have to meet the huge interest payouts.