(Image source from: news18.com)
Indian Prime Minister Narendra Modi held a meeting on April 4th with the Secretaries of the Indian government. The most discussed topic was about the poor health of the finances of several states of the country. Some of the officials clarified that five states are battling with a financial crisis and they would soon take the path of Sri Lanka. The major reason is due to the freebies which are announced by the state governments. The officials also announced that the freebies should be discontinued immediately to get their financial status better. Sri Lanka is badly hit due to the financial crisis and the basic essentials touched the skies. People had to wait in long queues for cooking gas, essentials, fuel and others.
On Tuesday, the government of Sri Lanka revealed it would default on its external debt of 51 billion USD. The debt of Sri Lanka soared to 102.8 percent of its Gross Domestic Product (GDP). There is similar fear in states like Punjab, Andhra Pradesh, Rajasthan, Bihar and Uttar Pradesh. The officials suggested the Centre to mount pressure on the states to discontinue the freebies. Last year in November, the Reserve Bank of India reviewed the states' budgets. The Fiscal Responsibility and Budget Management (FRBM) Committee asked the states to achieve the debt-to-GSDP ratio of 20 percent by the financial years of 2022-23.
By Siva Kumar