Ahmedabad, Dec 14 (IANS) Finance Minister P. Chidambaram Friday lambasted Gujarat Chief Minister Narendra Modi for turning Gujarat into a “highly indebted state” and imposing on the state’s future generations a crushing debt burden of Rs.940 billion ($23.8 billion).
He said this “Gujarat model of development” based on debts was totally “unacceptable” because such growth is not “inclusive” and shows “scant respect for the poor”.
Painting a gloomy picture of the state’s debt, Chidambaram said what the Modi government had done was to indulge in “excessive borrowing” to finance development in the last four years, which has pushed Gujarat into a “serious debt trap” with borrowings more than doubling from Rs.453 billion ($11.5 billion) in 2001-02.
“I am not against borrowings. But living beyond one’s means” is not in the state’s interest, the finance minister said.
“Who will repay, or how will it be repaid?” has become the key question before future generations, he asserted.
Gujarat today was one of the “highly debt-stressed states”, along with West Bengal, Punjab, Rajasthan, Kerala and Maharashtra.
Chidambaram said it was possible to reduce borrowing and also limit it through better tax collection, better tax administration and cutting down on wasteful expenditure.
The United Progressive Alliance (UPA) government at the centre had demonstrated it by keeping the fiscal deficit down to three percent of the gross domestic product (GDP) during the current fiscal (2007-08).
The finance minister said there has been a devolution of Rs.140 billion ($3.6 billion) in tax revenue to the state for financing capital outlays, besides another Rs.100 billion ($2.54 billion) towards funding non-plan expenditure.
Higher allocations have been made in the Gujarat power sector, water and sanitation and for watershed projects.
Yet, the state had indulged in excessive borrowings, Chidambaram said.
The debt situation was serious because interest payments on these debts accounted for 23.5 percent of the state’s revenue receipts and the debt was 285 percent of total revenue receipts.
Given this scenario, Modi should ask himself what he was passing on to the generation next and generation after that, the minister stressed.
Chidambaram, however, conceded it cannot be said that Gujarat has not achieved growth. But this growth had come from petroleum and petrochemicals sectors and the investment friendly policies pursued in Kutch district after the earthquake.
“I do not recall any other segment which has contributed to the development of the state.”
Dismissing growth claims of Modi as “boastful”, the union finance minister said the state lagged behind in the Prime Minister’s Gramin Sadak Yojana and the National Rural Employment Guarantee schemes.
Worse, Gujarat was ranked 17th among 18 large states in social expenditure, he pointed out.
Newcomers like Jharkhand and Chhattisgarh had performed well on this score, he said.
Asked how Gujarat got higher allocations every year during the tenth plan if it had failed on the growth front, the finance minister said this was due to the UPA government’s even-handed policy of allocating financial resources for development.
“Never in the history of India have states received as much funds as in the last four years.”
As a result, the states find themselves in an enviable position of holding a cash balance of Rs.740 billion ($18.8 billion) with them, Chidambaram said.