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Puducherry’s borrowings to go up by 4 percentage points in 2022-23

In 2021-22, the government had raised ₹1, 684 crore from open market and banks and for the year the Centre has allowed UT to borrow ₹1, 889 crore to meet its budgetary requirements.

August 24, 2022 03:18 pm | Updated 03:20 pm IST - PUDUCHERRY

The borrowings of the territorial administration is expected to increase by 4 percentage points in 2022-23 to meet its fixed budgetary outlay of ₹10, 696 crore. 

 Of the total budget of ₹10,414 crore (Revised Estimate) in 2021-22, 14% of the receipts have come as open market borrowing and negotiated loans from financial institutions.

Coming to the current financial year, of the outlay of ₹10,696 crore presented in the Assembly, 18% of the money has to be sourced from open market and financial institutions.

In 2021-22, the government had raised ₹1, 684 crore from open market and banks and for the year the Centre has allowed UT to borrow ₹1, 889 crore to meet its budgetary requirements. 

So the money that comes to the budget from loans would be 4 percentage points higher this year, compared to last financial year, which would ultimately add to the debt burden.

While outstanding debt of UT was ₹9,334 crore till March 2021, the debt amount increased to 9,859 crore till March 2022. The current year’s borrowing would take UT’s debt to around ₹11,748 crore by 2023.

The more reliance on market borrowing and negotiated loans to meet the expenditure requirements in this fiscal will undoubtedly further increase the debt burden of UT, said an official.  

“The only solace is that we are within Fiscal Responsibility and Budget Management (FRBM) norms. The outstanding debt is 22 to 25% of Gross State Domestic Product, which is within the FRBM norms. But the problem is with the growing debt servicing issue. A good chunk of our revenue is used for repayment of loans every year, “ the official pointed out. 

In 2021-22, 18% of the total expenditure incurred by the government was towards debt repayment and during this fiscal 22 % of the total budget outlay has been set aside for debt servicing. During the last financial year, the government spent around ₹ 1,700 crore for debt servicing from its own revenue resources, the official said.

The government, however, is confident of overcoming the financial constraints in implementing some of the new announcements, especially extending the Old Age Pension scheme to more than 10,000 new applicants, considering the tax buoyancy witnessed in the last few months. 

When the government expected own revenue collection to be around ₹ 6,190 crore in 2021-22, it ended up collecting ₹ 6, 840 crore. Of the total proceeds, ₹3, 354 crore (49%) came as Commercial Tax collection and ₹1, 096 crore (16%) as State excise duty. 

The government for the current financial year had set a revenue target of ₹6,557 crore, the official said adding that earnings would be more than the anticipated target this year.  

“ There could be little bit of uncertainty on Commercial Taxes front as Centre has stopped providing GST compensation. But we are expecting a quantum jump in excise collection. The government expects excise duty collection to touch ₹ 1,500 crore this year, “ the official said. 

Similarly, the government expected improvement in collections from stamp duty registration. Last year, the government netted ₹110 crore from registration. This year, it had set a target of ₹ 125 crore from stamp duty registration, the official added. 

As far fiscal deficit was concerned, the government has estimated the shortfall to be around ₹1,889 crore. While the fiscal deficit was around ₹ 1, 684 crore in 2021-22, it was around ₹1,552 crore in 2020-21.

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