States borrowing beyond capacity a concern: FM Sitharaman

NEW DELHI: Finance minister Nirmala Sitharaman said on Saturday that the temptation to spend on non-merit goods is very high in some states and borrowing endlessly for such expenditure is a matter of concern for all.
“Fiscal soundness of states and for an Atmanirbhar Bharat fiscal strength, the soundness is a very critical component. There are new sources of risks which every state is facing,” Sitharaman said while delivering the P Parameshwar Ji Memorial Lecture on ‘Cooperative Federalism’ in Thiruvananthapuram.
“The temptation of getting into not so viable non-merit expenditure is very high in some states…,” said the FM as she flagged the issue of some states borrowing endlessly beyond their capacity. She said by doing so these states are creating a burden for the coming generations. The FM cited the dues of power distribution companies (discoms) as an example where some states have huge pending dues.
Focusing on six aspects of cooperative federalism the FM said there need to have the Centre and states working together so that India as a whole can really move forward and develop.
Sitharaman cited several examples of the strong teamwork of the Centre and States to promote the idea of cooperative federalism. The FM said during the Covid-19 pandemic Prime Minister Narendra Modi had engaged with all states to ensure steady supply of PPE kits, oxygen related equipment and vaccines. She also cited the example of the use of technology to aid financial inclusion and detailed how the Centre had used technology to prevent pilferage and won the trust of citizens by ushering in transparency and respecting the taxpayers money and using it for the common good. The FM said the approach of the Modi government is to empower citizens by giving him a house, toilet, access to banks and loans and the advantages that he needs for basic living.