The State government has said that prudent fiscal measures and effective management of finances has ensured that the State registered lowest debt to GSDP ratio in the country with average debt to GSDP ratio at 17.2% during the five year period between 2014-19.
The ratio in respect of progressive States like Gujarat and Tamil Nadu was far higher at 21.1% and 21.08% respectively while that of other States like Maharashtra - 17.87% and Karnataka - 18.04% too was higher than that of Telangana. West Bengal and Punjab reported the highest debt GSDP ratio of 38.32% each during the period.
Highlighting the issue in the Socio Economic Outlook 2022, the government said as market borrowings were the predominant form of financing the fiscal deficit, it was important to ensure that borrowing costs were low. A recent RBI working paper – States’ Fiscal Performance and Yield Spreads of Market Borrowings in India – showed that better fiscal and market performance as linked to lower yield spread (lower cost of borrowing).
