The Centre has certified in Parliament that the financial condition of Telangana is ‘good’, while that of Andhra Pradesh is ‘worst’.
Replying to a question in the Parliament, the Centre made it clear that the Telangana government’s debt-to-GDP ratio is well within permissible limits, but AP’s condition is ‘alarming’.
Telangana has the second lowest debt to GDP ratio of 17 per cent among large States in the country, while AP has highest debt to GDP ratio among all the states at 31.6 per cent indicating how AP government is heavily dependent on loans to run the show.
While Maharashtra occupied the top slot with lowest debt to GDP ratio of 16.9 per cent, the Centre’s debt to GDP ratio was a whopping 48 per cent.
Union Minister of State for Finance Minister Anurag Thakur said in Lok Sabha that the Fiscal Responsibility and Budget Management (FRBM) Review Committee report was submitted to the Central government recently.
As per the report, Maharashtra and Telangana States were followed by Karnataka and Assam with debt to GDP ratio at 18.7 per cent and 18.9 per cent respectively. While Gujarat remained in fifth position with 19.2 per cent, the highest debt to GDP ratio was recorded by Jammu and Kashmir with 48.2 per cent followed by Punjab with 39.9 per cent.
The N.K. Singh-headed FRBM (Fiscal Responsibility and Budget Management) Review Committee report had recommended the ratio to be 40% for the Centre and 20% for the States, respectively, by 2023. It said that the 60% consolidated Central and State debt limit was consistent with international best practices, and was an essential parameter to attract a better rating from the credit ratings agencies.
This is one data point on how AP got so much debt during last 5yr rule.