Neighbors hit, center urges states to cut debt burden

NEW DELHI: The center has urged all state secretaries to keep an eye on mounting debt burdens and budget deficits as their performance will have a major impact on the country’s economy.
Sources say the government has warned that some of the states as big as India’s neighbors like Pakistan and Sri Lanka are facing an economic crisis and need to take quick steps to address growing concerns about their financial health.
TOI understands that the finance minister made a detailed presentation ahead of the first meeting of chief secretaries held in Dharamsala last week. It showed which states have higher debt burdens and recorded each state’s capital spending.

“Some of the chief secretaries assured Treasury Department officials that they would make detailed presentations to their respective state cabinets to update them on the issues,” a source said.
Another official added the center had raised concerns about how the situation could spiral out of control if immediate steps weren’t taken.
In April, senior center bureaucrats raised their concerns at a meeting chaired by PM Narendra Modi about populist plans and giveaways announced by political parties during the elections. They had warned that some of these states could pave the way for cashless Sri Lanka or Greece if the trend goes unchecked.
The prime minister had instructed top officials to analyze the long-term fiscal implications of the policies and communicate them to states.
Officials said central government officials also stressed the need to adopt other states’ best practices for crop diversification.
Sources said states have also been urged to focus on the quality of their teachers. The federal states were asked to fill vacant teaching positions, train them and equip them with the latest technologies.
“Based on these talks, final recommendations will be made to the government, which will then be presented to the government Governing Council by Niti Aayog for advice,” an official said.

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