The State government, in its 2019-20 budget, has estimated the primary deficit to be more than ₹18,016 crore.
Primary deficit is the difference between the fiscal deficit of the current year and the interest paid by the government on loans obtained in the past.
In fact, it has been on the rise ever since the State’s bifurcation in 2014.
What it indicates is that the government’s borrowings are utilised to pay the interest on loans obtained rather than on capital expenditure. The interest payments have increased phenomenally during the last three years. Also, public debt has scaled up notably. The previous government had estimated the primary deficit for the year 2018-19 to be ₹9,128 crore. In the revised estimates, it touched ₹19,315 crore. The actual figure will be known only by the next budget.
“The primary deficit was ₹18,525 crore in 2017-18 and ₹12,014 crore in 2015-16. It was just ₹5,846.15 crore in 2014-15, the year of bifurcation,” sources have said.
‘Not a healthy sign’
“The rise in primary deficit is not the sign of a healthy economy. It means the government is spending more on interest payments instead of creating wealth,” says an official.
“Any borrowing / loan that does not lead to creation of assets, or reduction in liabilities, will not help the economy in the long run,” he adds. The interest payment during 2015-16 was ₹9,848 crore. It went up to ₹11,697 crore in 2016-17 and ₹13,846 crore in 2017-18. The figure in revised estimates for 2018-19 stood at ₹14,303 crore. The budget estimate for the current fiscal (2019-20) put the amount at ₹17,243 crore.
Public debt
Similarly, public debt (open market loans, loans from the Central government, loans from other institutions, small savings, provident fund, deposits and reserve funds) increased from ₹1.69 lakh crore in 2015-16 to ₹2.23 lakh crore in 2017-18. The revised estimates for the 2018-19 fiscal put the figure at ₹2.58 lakh crore.
The YSRCP government now plans to peg it at ₹2.91 lakh crore this financial year, which will be 26.96% of the Gross State Domestic Product (GSDP). The public debt was close to 28% during the last three years.