Ajay Umat, TNN | Apr 6, 2013,
The Gujarat government is paying a mind-boggling interest of Rs. 34.50 crore every day. By 2015-16, the debt would mount to Rs 2,07,695 crore as per the state government’s budget estimates. A large chunk of the state’s revenues go towards debt servicing. The state’s total debt was less than Rs 10,000 crore when the BJP first came to power in Gujarat in 1995.
Critics have pointed out that much of the spending is on show-piece infrastructure projects, while overall spending on key areas like health and infrastructure remains low. The debt has mounted despite Gujarat having one of the highest VAT on petrol and also being the one of the few states to have VAT on fertilizers.
The latest CAG report tabled in the assembly last week stated, “As of 31 March 2012, the government had invested Rs 39179 crore in areas where the average return on investment was just 0.27 per cent in last five years while the government paid an interest of 7.75 on its borrowings during the same period.” It said continued use of borrowed funds to fund investment which do not have sufficient returns will lead to an unsustainable financial position.
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