T is not among the 10 most indebted states | Hyderabad News

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Hyderabad: At a time when the Union Finance Ministry suspended cash-strapped Telangana’s full-time clearance for open market borrowing, citing increased off-budget borrowing, the RBIthe last report, interestingly, excluded Telangana among the 10 most indebted states.
The apex bank, however, said Telangana, along with Jharkhand, Kerala, Odisha and Uttar Pradesh, is among the five states with the biggest increase in subsidies over the past three years. The most indebted states in the country are Madhya Pradesh, Rajasthan, Bihar, Jharkhand, Haryana, Uttar Pradesh, West Bengal, Kerala, Andhra Pradesh and Punjab.
According to current budgetary standards, the debt ratio of the GSDP should not exceed 30%.
“Scenarios such as these are certainly concerning and will imply that almost 30% of income will go to debt and service. It is high time for states to reconsider their spending habits,” said Chittedi Krishna ReddyAssistant Professor of Economics, University of Hyderabad.
The June RBI report also highlighted the same concern. “In recent years, states have begun to issue part of their subsidies in the form of freebies. There is no precise definition of freebies, but they must be distinguished from public goods, the expenditure of which brings economic benefits such as public distribution”. and employment guarantee scheme.
According to the RBI, providing free electricity, free water, free public transport and waiving pending utility bills falls under the sphere of freebies. He went on to say that freebies could undermine credit culture, distort prices through cross-subsidies and erode incentives for private investment.
The apex bank said the recent economic crisis in neighboring Sri Lanka is a reminder of the critical importance of long-term public debt sustainability. “Fiscal conditions in the states are showing signs of deteriorating, slowing tax revenue and indicating an increase in subsidies,” he added.
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