Most of the states in India are deeply in debt and seem far from being able to meet the target of reducing their debt to 20% of state GDP by the next financial year.
An analysis of the latest numbers from the government reveals that only four states and union territories out of the 31 in India have debt levels below 20% of their Gross State Domestic Product -- the sum of all goods and services purchased in the state.
On the other extreme are states like Punjab, Mizoram, and Nagaland have debt levels hovering near the 50% mark.
Looking at the debt of the state in relation to its GDP is a better way to gauge which states are biting off more than they chew.
The worst offender in this regard is Mizoram, followed by Punjab. Mizoram's mounting borrowings have taken its Debt-GDP to an alarming 53.1 per cent as per FY23, whereas Punjab's debt- GDP stands at 47.6 per cent.
NCT Delhi was a clear outlier with a 2.2 per cent Debt-GSDP ratio. States like Assam (27.5 %), Telangana(28.2%), Chhattisgarh(27.1%), Madhya Pradesh(28.9%) and Haryana(28.95) were marginally higher than the mandated limit.
Gujarat(19.5%), Odisha(15.75), and Maharashtra(19.0%) managed to maintain their debt below 20 per cent of their GSDPs, mainly due to their strong industrialised economies resulting in strong revenue streams.
According to the FRBM Act amended in 2018, the total government debt in India is supposed to be reduced to 60 per cent of the country's GDP with 40 per at the Centre and 20 per cent in States.