Centre tells states to cut debt

The Centre has urged chief secretaries of all states to keep a check on increasing debt burden and fiscal deficit as their performance will have a huge bearing on the country’s economy. Sources said the government has flagged that some of the states are as big as India’s neighbours such as Pakistan and Sri Lanka, which are facing economic crisis, and they need to take quick steps to address the growing concerns on their financial health.

The finance secretary made a detailed presentation before the first convention of chief secretaries held last week at Dharamsala. It showed which states have higher debt burden and the record of capital expenditure of each state. “Some of the chief secretaries assured the finance ministry officials that they would make detailed presentations before their respective state cabinet to apprise them about the issues,” said a source. Another official added the Centre has flagged concerns over how the situation may go out of hand if immediate steps are not taken.

In April, top bureaucrats at the Centre had flagged their concerns at a meeting chaired by PM Narendra Modi over populist schemes and freebies announced by political parties during elections. They had warned that some of these states could be heading the way of cash-starved Sri Lanka or Greece if the trend remained unchecked.

The PM had directed the top officials to analyse the long-term fiscal implications of the policy measures and share them with states. Officials said that the central government officials also highlighted the need to adopt best  practices of other states for crop diversification.

Sources said states have also been urged to focus on the quality of their teachers. The states have been asked to fill vacancies of teachers, train them and equip them with the latest technologies. “Based on these discussions, final recommendations will be made to the government, which will then be placed before the Governing Council of Niti Aayog for deliberation,” said an official.

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