India’s tradition of Spin – II

The first post on this title can be viewed here.

Today ToI carried an article titled “Gujarat’s burden highest ever as ‘debt-free’ Modi plans flight” For a moment I thought Narendra Modi had ran away with the money. Every office has a person who is always on the look out for borrowing. They repay on time, making you feel confident. Slowly the aount increases, so does the frequency. Suddenly one day you find they abscond. That is when you realise every body in the office has lent money to that person. Has NaMo done such an act and taken flight?

The first paragraph of the article is reproduced below:

Chief minister Narendra Modi’s supporters may feel that he has served Gujarat enough and now wants to repay the debt to ‘Bharat Mata’, but Gujarat’s actual debt has mounted from Rs 45,301 crore in 2001-02, when he first came to power, and is projected to touch Rs 1.76 lakh crore by 2013-14, when he plans his flight to New Delhi.

The last line gives you the confidence it has not happened. You are only given a warning that this perpetrator of this scheme that ToI has unearthed has still not taken flight.

As on 31-03-12, the revised estimates of total debt stood at Rs 1,38,978 crore. While two other states – West Bengal (Rs 1,92,100 crore) and Uttar Pradesh (Rs 1,58,400 crore) – have a higher debt, they aren’t claiming they are a “model state”. Besides, if Modi leaves for Delhi after “settling his debt” with Gujarat, he is leaving behind the highest ever per capita debt of Rs 23,163 – if the population is taken at exactly six crore.

Now the cat is out of the bag – “settling his debt”.

Be that as it may facts should speak for itself. Let us look at the facts. Table 1 has three columns – The first two represent Public Debt as %age of GSDP & Total Revenue Receipt. States doing better than Gujarat are marked in Green and those poorer in Red.

It can be seen that there are only three reds in the second column that represents Public Debt as %age of Total Revenue Receipts. This could mean two things – either Debt is very high or Revenue Receipts are low. The first column on the other hand has more red meaning that more states have borrowed a higher %age of their GSDP than Gujarat did. But to me the third column is more relevant. Tax Receipts as a %of GSDP. It shows that the state is taking an higher share of the revenue. This also assumes significance as the ToI article alleges:

The debt has mounted despite Gujarat having one of the highest VAT on petrol and also being the one of the few states to have VAT on fertilizers.

If this was true the last column would be basically green. But we see only 4 Greens out of a potential 13. The states that are green are Bihar, Orissa, Rajasthan and West Bengal. Which means that all the so called Developed states are collecting much more taxes than Gujarat does. A state has two options – it could either collect more taxes and so need much lesser debt or collect less taxes and borrow the rest. The second would be more difficult to manage but if done would mean it leaves more money with the public.

Book1_Page_1

The second  table shows how various states have performed over the years on one particular criteria – Public Debt as a %age of GSDP. For ease of viewing I have marked Gujarat in Yellow and the yearly high and low in green and red. Draw your own conclusions.

Book1_Page_2

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2 thoughts on “India’s tradition of Spin – II

  1. could you please post a more detailed explanation of this spin? or a link where i can find the same? I would like to know if and how TOI twisted the figures to get the “desired” story. Thank you!

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