Assam’s rising debt load and high committed expenditure worry CAG

Staff Reporter

GUWAHATI: The fiscal health of Assam seems stable. However, when viewed through the lens of the CAG, things look different.

According to the CAG report of 2024-25, the increasing debt load, high committed expenditure and limited capital investment raise concern about the fiscal sustainability of the state government. “There is a need for revenue augmentation, better expenditure control and structural reforms to ensure long-term fiscal health,” the CAG report said.

Committed expenditure of the state government means the payment of salaries and pensions, interest paid on loans, debt repayment, etc. The state exchequer has to cough up around Rs 48,000 crore annually in the form of salary and pension. The state government says that it has been able to meet the salary and pension expenditure with its own sources. Earlier, the state government had to depend on central grants for such payments.

The report said that the state’s expenditure during the year 2024-25 was dominated by a moderate growth of revenue expenditure, particularly committed costs and subsidies. “During the last five years, despite increasing pressure from committed expenditure, the state was able to maintain a consistent level of fiscal flexibility, though with limited scope for expansion in discretionary and developmental expenditure. Capital expenditure during the past five years remained volatile and below budgeted levels, reflecting constraints in infrastructure investment,” the report said.

The report observed that though the GDP of the state had increased in the past five years, the non-tax revenue of the state declined by 9.34 per cent, and grants from the centre also declined. Subsidies during 2024-25 increased sharply, mainly due to power subsidies. As a result, the state was unable to arrest the revenue and fiscal deficits within the target levels of the state FRBM Act. The report also said, “Resorting to off-budget borrowings hampered the maintenance of universality and unity in the budget. Funds, viz., the AIFA sinking fund, were kept outside the government account, which violates the provisions of Article 266 of the Constitution of India.

On borrowings, the state government reiterates that it has been borrowing funds well within the RBI’s guidelines. The load burden on the state government was Rs 1.72 lakh crore as of March 31, 2025.

In its recommendations, the CAG said that the state government should create a practical budget based on trustworthy estimates of how much money it can raise, the needs of the departments, and their ability to use the funds given to them to prevent overestimating the budget without matching it to the actual resources available. The government can take action and enhance its monitoring to ensure that it meets the deadlines for major policy announcements in the budget. The government may make concrete efforts to augment its revenue resources to bridge the mismatch between revenue receipts and expenditure and reduce its fiscal deficits.

Also read: Assam’s Outstanding Liabilities Climb to ₹1.72 Lakh Crore in 2024-25, CAG Flags Rising Debt and Fiscal Strain