Haryana used borrowed funds to repay earlier borrowings: CAG

The Comptroller and Auditor General (CAG) has commented on the state’s growing debt profile, saying that borrowed funds are being used “mainly for meeting current consumption and repayment of earlier borrowings instead of Capital expenditure.”

The report on state finances for 2023-24 was tabled in the Haryana Legislative Assembly on August 27.

According to CAG, the Haryana's debt increased from Rs 2.16 lakh crore in 2019-20 to Rs 3.27 lakh crore in 2023-24, registering a 51.52% increase, mainly due to an increase in public debt (Rs 99,360 crore) and public account liabilities (Rs 11,700 crore).

The total liabilities increased by 11.43% in 2023-24, compared to 11.05% in 2022-23. The report pointed out that for 2023-24, Rs 2.80 crore was internal debt, while Rs 41,771 crore was on account of public account liabilities and Rs 4,079 crore was loans from the Centre.

“The ratio of total liabilities to GSDP slightly increased from 29.21 per cent in 2019-20 to 29.81 per cent in 2023-24. The liabilities were 3.22 times the revenue receipts and 4.05 times the state’s own resources,” it said.

The public debt increased by Rs 99,360 crore (53.57%) during the period 2019-24, wherein internal debt increased by Rs 96,986 crore (52.77%) and loans from the GoI increased by only Rs 2,374 crore (139.24%). The public account liabilities increased by Rs 11,700 crore (38.91%) during the same period.

CAG said, “Borrowed funds should ideally be used to fund capital creation and developmental activities. Using borrowed funds for meeting current consumption and repayment of interest on outstanding loans is not sustainable.”

The report highlighted, “The repayment of borrowing (principal) to total expenditure of the state ranged between 12.15 and 29.15 per cent during the period 2019-24. During this period, the state government utilised between 36 per cent and 67 per cent of its current borrowings for the repayment of earlier borrowings (principal).”

It added, “Revenue expenditure met out of net available borrowings ranged between 11 per cent and 34 per cent. During 2023-24, only 18 per cent of the current borrowings were utilised for capital expenditure. Thus, the borrowed funds were being used mainly for meeting current consumption and repayment of earlier borrowings instead of capital expenditure.”