The Hindu Business Line : Move for Debt Management Cell afoot in Kerala

THE State Government has decided to set up a Debt Management Cell in the Finance Department that will oversee the implementation of the `debt swap' scheme as also identify various means ways of arresting the rising trend in yearly debt servicing overheads.

An official spokesman of the Finance Department said here that the State Government has decided to take maximum advantage of the debt swap scheme by going the whole hog with its expeditious implementation. Already, high interest-bearing loans worth Rs 1000 crore have been brought under the scheme and swapped for correspondingly low interest-bearing loans.

The State Government had presented its case with the visiting 12th Finance Commission and sought its considered intervention in being able to bring down the heightened level of indebtedness. The Government was hopeful that its concerns would be taken due care of while the Commission finalised allocations.

The Finance Department is committed to doing whatever possible within its command to address the issue of the constantly increasing level of exposure to debt and its servicing requirements. In 1990-91, the annual interest commitments amounted to Rs 340.64 crore that shot up to Rs 1286.09 crore in 1996-97. Ever since, there has been an exponential increase in the level of the yearly interest outgo. By year 1999-2000, it had gone up to Rs 2,257.6 crore, and the following year, to Rs 2,489.47 crore.

As per the revised estimates for the current financial year, the annual interest outgo has been fixed at Rs 3,340.74 crore, the spokesman said. The Government is aware of the ramifications of this unsustainable mismatch in its finances, and will take all necessary steps to ensure that this did not precipitate a situation where routine transactions were affected.

A state had been reached in 1997-98 when as much as 94 per cent of the revenue income was required to be exhausted to finance salary and pension payouts, leaving successive governments no other option but raise loans for developmental expenditure.