By Editor You must have heard that India’s GDP growth numbers are doing pretty great, even though there are some geopolitical challenges that we’re facing as a nation. But that’s just because some states are keeping up with the growth in pretty much every segment. Though the thing is, there are some states in the country that have much higher debt than their GDP, and these states can do well or have the potential to do well, and if they do that, surely, that’ll reflect in the overall GDP numbers of the country. Anyways, while we’re at it, why don’t we get to know about the Top 10 Indian States With The Highest Debt? Here we go.
1. Jammu and Kashmir
It is true that in the last several years, possibly decades, no doubt, Jammu and Kashmir has always been the focal point of the debt talks of Indian states. But why? Firstly, those who don’t know, J&K ranks first on this list because of a super high debt to GPD ratio of 51%. And just so you know, even though it is less than half the size of most other states, the total debt has increased to almost ₹1.2 lakh crore. Right here, it is true that more than half of its budget is used for the payment of salaries, pensions, and interest, thus, very little money is left for development. And it is precisely for this reason that J&K is at the top of the list today.
2. Arunachal Pradesh
Not a single doubt in the fac that Arunachal Pradesh is a state, whose debt figures of which almost always stun people. The indebtedness appears significant, if not frightening, as the state’s debt-to-GDP ratio substantially fluctuates from 47% to 57%, even if the overall debt is only around ₹25,000 crore. That’s on the lower side, but this is just a result of the state’s economy being very small. A rugged landscape, small population, and few industries constrain Arunachal in its efforts to make the money that it needs on its own.
3. Punjab
For many years now, yes, the debt problem of Punjab has been among the top issues that have been widely discussed in India. The debt-to-GDP ratio is almost 46.6%, and the total debt has gone beyond ₹3.78 lakh crore. How and why? Well, you’d get the answer in how various subsidies and welfare schemes have increased the state’s finances’ pressure due to the slow piling up over the years.
4. Himachal Pradesh
Going down just a bit, you see, while Himachal Pradesh is well-known for its breathtaking views, it has a debt issue growing behind the scenes. Like, the state’s debt-to-GDP ratio is about 45.2%, and the total debt is nearly ₹1 lakh crore. No doubt, right here, it takes a much higher sum of money to maintain roads, infrastructure, and public services in steep hilly areas than in the plains. And since the economy of Himachal is not that big, even normal borrowing increases the ratio very fast, thus keeping the state at the fourth position for most of the time.
5. Nagaland
This one is intriguing too, like, the state of Nagaland has had a tough time financially over the years, and one can see that in its debt-to-GDP ratio, which has been close to 40% for a long time. Going more into the specifics, see, the total liabilities, which are roughly around ₹20,000 crore, are not that high if we compare with other states; however, because the Nagaland economy is not very vibrant, the figures become noteworthy. Plain and simple! Here though, due to the fact that the region has less number of industries and the connectivity is not good, the government has to take loans more than once to be able to keep the necessary services running.
6. Meghalaya
Oh and no doubt, Meghalaya is yet another state from the northeast that is struggling with increased debt. Its debt-to-GDP ratio is approximately 39%, and the total debt is nearly ₹18,000 crore, so the debt load is quite significant for the small economy, overall, of course. If you want to dive deep into the reasons, see, the biggest part of the revenue is derived from central grants, while the expense of constructing and maintaining services in the mountainous area remains costly annually, year after year.
7. West Bengal
It is true that West Bengal has been maintaining a heavy debt burden over the last several years. You might not know this, but at present, the state’s debt-to-GDP ratio is close to 38% and the total liabilities are approximately ₹7.14 lakh crore. Most of the money made has been used to repay the interest on the old loans, and so there is very little money left for new development.
8. Rajasthan
This one is a slow rise in this list but over the past several years, Rajasthan’s debt has been increasing gradually, and as a result, it is now ranked eighth in terms of debt. The state’s debt-to-GDP ratio is close to 35.8%, and the total debt has gone up to approximately ₹6.37 lakh crore. The two main factors for this increase in the upward trend are higher spending on welfare schemes and slower industrial growth.
9. Tamil Nadu
Oh and you must have heard that Tamil Nadu is among the top 5 most industrialized and economically powerful states of India; however, the state’s debt is about ₹5.7 lakh crore, while the debt-to-GDP ratio is around 26%. No doubt, the figure is huge just because the state is big. Besides that, public welfare schemes that are quite popular have resulted in an increase in spending that is meant to last for a long time.
10. Uttar Pradesh
And finishing off this list, see, Uttar Pradesh completes our list, and quite naturally, as handling finances in the largest state of India by population is definitely a challenging job. The state has a total debt of almost ₹6.5 lakh crore, and its debt-to-GDP ratio is approximately 25%. So, while the absolute figure of UP is very large, the percentage appears to be moderate due to its huge economy.
Conclusion
Usually, whenever we look at a specific state’s debt, it is always better to compare it with the GDP numbers of that state to have a better idea of what kinda of situation that state is in. A higher debt-to-GDP ratio is surely a concerning thing, and that is pretty much what we talked about in this post today.