The total debt burden on the Uttar Pradesh government is estimated to touch Rs 7.84 lakh crore by the end of next fiscal 2023-24 commencing from April 1. The exceeds the size of the annual budget of 2023-24, which is Rs 6, 90 lakh crore. The Reserve Bank Of India has flagged the state governments against the rising debt burden.
Although UPs debt burden has fallen to 32.1% of the gross state domestic product (GSDP) in 2023-24, compared to 34.2% in revised estimates for 2022-23, the sovereign debt in absolute terms is estimated to jump from Rs 7 lakh crore to Rs 7.84 lakh crore during the period.
According to the UP Annual Budget (2023-24), the nominal UP GSDP has been estimated at Rs 24.39 lakh crore in 2023-24.
Interestingly, the estimated public debt of Rs 7.84 lakh crore exceeds the UP Annual Budget of Rs 6.90 lakh crore by Rs 94,000 crore or nearly 14%. In 2022, the RBI had raised concerns over a built-up financial Stress in several states and suggested corrective steps in the five most indebted provinces.
Although UP does not figure among the top indebted states in India, the state witnessed its public debt ratio shoot past 30% of the GSDP during the pandemic years, owing to difficult economic conditions and muted tax collection, a phenomenon which was pan-Indian as well as global following Covid-19 exigencies.
While UP had successfully tamed the public debt ratio below 30% till 2020-21, it increased to 33.4% and 34.2% during the 2021-22 and 2022-23 (revised estimates) fiscal years, respectively, due to the pandemic.
Meanwhile, UP is estimated to receive about Rs 71,200 crore (2.9% of GSDP) in loans from the Centre during 2023-24, compared to Rs 51,860 crore (2.5% of GSDP) during 2022-23.