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BJP-ruled states head over-spending chart

Sunil Jain in New Delhi | January 29, 2003

Apart from the central government whose fiscal deficit is steadily deteriorating, what's interesting is that among the states, it is the Bharatiya Janata Party-ruled ones that are generally the worst in terms of fiscal indiscipline.

The BJP election symbolIndeed, the only three states in the country that are working on fiscal responsibility bills are those governed by the Congress  -- Karnataka passed the bill in August last year, while both Maharashtra and Punjab are in the process of getting their bills passed.

India's most industrialised state Gujarat has, under BJP rule, seen its revenue deficit rise from 6.12 per cent of its revenue receipts in 1996-97  to 46.72 in 2001-02.

Only the communist-ruled West Bengal and the fledgling Uttaranchal have worse figures for 2001-02. No other state has seen a fall of anywhere near this magnitude.

Gujarat's stock of debt has also doubled over three years, from Rs 23,611 crore (Rs 236.11 billion) in 1999-00 to Rs 47,317 crore (Rs 473.17 billion) in 2002-03, again a feat matched by no other state.

Himachal Pradesh has been a close second to Gujarat, with its revenue deficit to revenue receipts ratio rising from 7.77 per cent in 1996-97 to 22.6 per cent in 2001-02, and further to a budgeted 31.95 per cent this year.

With debt also spiralling, interest payments as a proportion of revenue receipts has also doubled, from 15.71 in 1996-97 to an estimated 32.98 this year.

Himachal's debt-to-GDP ratio is a whopping 90 per cent today, as against just 58 per cent for the Union government.

States like Rajasthan and Maharashtra, currently ruled by the Congress/Congress-coalition, have seen the start of their decline during the BJP rule.

Maharashtra's revenue deficit ratio rose from 8.26 in 1996-97 to 18.08 in 1998-99, when the Shiv-Sena-BJP was voted out. And Rajasthan's figures rose from 11.46 to 34.92 in this period of BJP rule.

Of course, it has to be added that this is the period when, thanks to the 5th Pay Commission, all states saw a dramatic decline in their fiscal health.

In Maharashtra, the Congress-coalition has, in fact, even bettered the previous government by borrowing more -- the state's stock of debt, including guarantees for government-owned corporations, rose from Rs 71,241 crore (Rs 712.41 billion) in 1999-00 to Rs 121,169 crore (Rs 1,211.69 billion) in 2002-03.

And despite all the talk of fiscal rectitude -- DAs and bonuses have been frozen and MSEB's losses were cut from Rs 2,800 crore (Rs 28 billion) in 2000-01 to Rs 308 crore (Rs 3.08 billion) the next year  -- by just-removed chief minister in 2000-01, additional subsidies of Rs 745 crore (Rs 7.45 billion) were given to powerlooms and farmers last year.

Punjab, also sowed the seeds of its decline during the SAD-BJP government of Parkash Singh Badal, and its revenue deficit ratio rose from 24.37 in 1996-97 to 39.92 by the time the government was voted out, and the Congress came to power.

The Badal rule even saw the World Bank cancel its loans when the government promised to give free power to farmers.

Karnataka which was ruled by the Janata Dal till the Congress took over in 1999 has seen a relatively sharp decline in finances, with the revenue deficit ratio rising from 6.02 in 1996-97 to 15.91 in 2001-02.

In the last three years of Congress rule, its debt stock (including guarantees) has risen from Rs 26,098 crore (Rs 260.98 billion) to Rs 42,320 crore (Rs 423.20 billion) in 2002-03.

Karnataka is the first state in the country to formally pass a fiscal responsibility bill, to cap both deficits as well as fresh borrowings.

Madhya Pradesh saw a dramatic decline in its revenue deficit ratio, from 14.46 in 1996-97 to 29.40 in 2001-02.

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Number of User Comments: 6

Sub: well...

It is ok .. as long as it is not going into the pockets of the ministers. Most of these debts are created by previous ...

Posted by prem

Sub: Politics of BJP

ofcourse, The only agenda of BJP is to be in power and enjoy the magnitude of power at what ever cost that may be. They ...

Posted by Muthu Krishnan

Sub: To the editor

When you publish an article like this could you also plese publish the source of the information and probably provide a link to where the ...

Posted by whoami

Sub: very shameful for BJP


Posted by dushyant


even the Business section of Rediff is doing its best to trash the BJP as much as possible. Rediff is only readable because of Varsha ...

Posted by WOW


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