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Friday, July 4, 2025

States increasing debts despite big earnings going in interest

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The wheel of development is getting stuck in the swamp of loans. The states are about to take 52% more loan in between January and March, than what they had taken during the nine-month period between April and December. 30 states has taken a total loan of 2.28 lakh crores between April and December 2022, and are all set to take a loan of 3.40 lakh crore rupees between January and March 2023. Karnataka will take the highest loan amount of 36 thousand crore rupees. All this has been revealed in the latest report of the Reserve Bank.

Punjab is the biggest borrower in the country which has taken a loan of up to 53.3% of its GDP. As per the Reserve Bank, the debt on any state should not be more than 30% of its GDP. With higher debts, the result is that a large portion of the states’ earnings go into paying the loan interests. Punjab and Haryana are using 21% of their earnings in paying the interests, which is the highest in the country.

Bank of Baroda’s Chief Economist, Madan Sabanvis, has said that with this, other important expenditures get stalled and development gets affected adversely. A major reason behind the loans is free schemes also. States should spend only 1% of their GDP on the same, but Punjab is spending 2.7%, Andhra Pradesh 2.1%, and Madhya Pradesh and Jharkhand are spending 1.5%.

Sonakshi Datta
Sonakshi Datta
Journalist who wants to cover the truth which others look the other way from.

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