Bill seeking to increase debt to GSDP ratio presented in Assam Assembly

Guwahati: The Assam government on Monday introduced an amendment bill in the Assembly seeking to increase its debt to GSDP ratio to 32 per cent from the existing 28.5 per cent for the five financial years beginning from 2022-23.

Introducing The Assam Fiscal Responsibility and Budget Management (AFRBM) (Amendment) Bill, 2022′ on the first day of the Assembly’s Budget session, Finance Minister Ajanta Neog said that the proposals have been necessitated due to the impact of the COVID-19 pandemic on the state’s finances.

Due to the pandemic, the state’s own revenue collection declined in 2020-21 and the Assam government undertook several capital intensive projects during the period, according to the statement of objects and reasons of the bill.

The state government has been managing its developmental expenditures mainly through central assistance in the form of grants-in-aid and capital borrowings.

As the borrowing has significantly enhanced from the market and other available resources, the debt to GSDP ratio may increase over the years, the statement said.

The AFRBM Act has stipulated the outstanding debt to GSDP ratio at 28.5 per cent from 2014-15 onwards, but it may go up to 26.39 per cent in 2021-22, it said.

The bill proposes to enhance the outstanding debt target for the state government to 32 per cent of the GSDP for the next five years from 2022-23, with the additional fiscal space to be utilised, if required, strictly for capital projects.

The state has increased additional borrowing ceiling of 0.50 per cent of the GSDP based on power sector reforms over and above the prescribed limit of 4 per cent for 2022-23, and the new bill proposes to extend it from 2022-23 to 2024-25.

The finance minister also introduced The Assam Taxation (Liquidation of Arrear Dues) (Amendment) Bill, 2022′ to restructure certain provisions of the principal legislation of 2005 for the purpose of clearing up long outstanding dues under various taxation acts.

The principal act, The Assam Taxation (Liquidation of Arrear Dues) Act 2005, was applicable for unpaid amounts up to June 30, 2017, under any provision of relevant acts passed on or before September 30, 2020.

Through the amendment, it has been proposed to extend the period of the principal act from March 31, 2021, to September 30, 2022, or any such later date as the state government may specify from time to time.

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