The debt of the states is increasing! Estimated to remain at 30-31 percent of GSDP, a decision of the government can provide relief

New Delhi. The debt of the states will remain at a high level of 30-31 percent in comparison to their Gross Domestic Product (GSDP) in the current financial year. In a report released by Crisil on Thursday, it has been said that due to marginal increase in revenue and excessive borrowing from their sources, the debt of the states will remain at high level. The rating agency said that the total debt of the states against the GSDP is likely to be 30-31 percent in the current financial year. This figure was 31.5 percent in 2021-22.

Crisil said that after staying in the range of 25 to 30 percent during the financial year 2016-20, the debt of the states had crossed the level of 34 percent in the financial year 2020-21. After this it came down to 31.5 percent in the financial year 2021-22.

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This decision of the Center can give relief
The report said that due to high capital expenditure coupled with modest revenue growth, the debt requirements of the states remained intact. However, the Centre’s decision to give special assistance of Rs 1 lakh crore to the states may bring some relief. This assistance will be given for expenditure on infrastructure and discom (power distribution companies) improvement.

Crisil said its estimates are based on a study of 18 top states. These states include Maharashtra, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh, Andhra Pradesh, Telangana, Rajasthan, West Bengal, Madhya Pradesh and Kerala.

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Know what is GDPP
Gross State Domestic Product (GSDP) is the monetary measure of the total amount of all finished goods and services produced within a state’s geographic boundaries during a given period (usually one year and without repetition). Gross State Domestic Product (GSDP) or income of the state is the most important indicator to measure the economic development of the state. These projections of the economy over time reveal the extent and direction of change in the levels of economic development.

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