Executive Summary:
This document presents the Ministry of Finance's response to Lok Sabha Unstarred Question No. 3940 regarding the utilization of loans by State Governments. It provides details of loans taken by State Governments from the Central Government over the last three years (2021-22, 2022-23, 2023-24 Revised Estimates) and the current financial year (2024-25 Budget Estimates), as provided by the Reserve Bank of India. The response also addresses concerns about the misuse of these loans. The date of the response is August 18, 2025.
Key Points / Main Content:
* **Loan Details:**
* Details of loans taken by State Governments from the Central Government for the years 2021-22, 2022-23, 2023-24 (RE), and 2024-25 (BE) are provided in an annexure.
* **Fiscal Responsibility:**
* All States have enacted Fiscal Responsibility and Budget Management (FRBM) Acts.
* These acts mandate State Governments to ensure fiscal prudence and stability.
* This includes eliminating revenue deficits, reducing fiscal deficits, and practicing prudent debt management.
* State Legislatures monitor compliance with the FRBM Acts.
* **Borrowing Approval:**
* The Department of Expenditure, Ministry of Finance, generally follows the fiscal limits recommended by the Finance Commission.
* This is done while approving State borrowings under Article 293(3) of the Constitution of India.
Impact Analysis:
* **State Governments**
* *Impact:* Accountable for utilizing loans prudently and adhering to FRBM Act provisions, ensuring fiscal stability and responsible debt management.
* *Action Required:* Maintain fiscal prudence, manage debt responsibly, and comply with their respective FRBM Acts; compliance monitored by State Legislature.
* **Department of Expenditure, Ministry of Finance**
* *Impact:* Responsible for overseeing and approving State Government borrowings, ensuring compliance with fiscal limits.
* *Action Required:* Adhere to Finance Commission's recommendations when approving State borrowings under Article 293(3) of the Constitution.
* **Reserve Bank of India**
* *Impact:* Provides data regarding loans taken by State Governments from the Central Government.
* *Action Required:* Continue to provide accurate data on State Government loans to the Ministry of Finance.
* **State Legislatures**
* *Impact:* Responsible for monitoring the State Government's adherence to the Fiscal Responsibility and Budget Management Act.
* *Action Required:* Monitor compliance to the Fiscal Responsibility and Budget Management Act.
Key Entities Referenced
State Governments: Refers to the governments of the individual states within India. The document discusses loans taken by these governments from the Central Government.
Central Government: Refers to the Government of India, which provides loans to the State Governments.
Ministry of Finance: A department of the Government of India responsible for financial matters, including managing loans to state governments.
Reserve Bank of India: The central bank of India, which provides data on loans taken by State Governments from the Central Government.
Fiscal Responsibility and Budget Management FRBM Act: An act enacted by all States in India to ensure fiscal prudence and stability by managing revenue and fiscal deficits, debt, and transparency.
Finance Commission: A constitutional body in India that recommends principles governing the distribution of tax revenues between the Centre and the States.
Article 293 3 of the Constitution of India: A clause within the Indian Constitution related to the borrowing powers of the states and the central government's role in approving these borrowings.
Andhra Pradesh: A state in India that has taken loans from the Central Government as detailed in the annexure.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF EXPENDITURE
LOK SABHA
UNSTARRED QUESTION NO. †3940
TO BE ANSWERED ON MONDAY, 18th AUGUST, 2025
27 SRAVANA, 1947 (SAKA)
UTILISATION OF LOANS BY STATE GOVERNMENTS
†3940. SHRI ARUN KUMAR SAGAR:
Will the Minister of FINANCE be pleased to state:
(a) the details of the loan taken by the State Governments from the Central Government
during the last three years and the current financial year;
(b) whether the State Governments have utilised the above loan for the purpose it was
availed;
(c) whether the Government has received any complaints regarding misuse of loan taken by
the State Governments;
(d) if so, the details thereof; and
(e) the action taken/being taken by the Government in this regard?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) As per information provided by the Reserve Bank of India, details of the loan taken by the
State Governments from the Central Government during the last three years i.e. 2021-22, 2022-
23, 2023-24 (Revised Estimates-RE) and 2024-25 (Budget Estimates-BE) are at Annexure.
(b) to (e) All States have enacted their Fiscal Responsibility and Budget Management (FRBM)
Act, which makes the State Government responsible to ensure prudence in fiscal management
and fiscal stability by progressive elimination of revenue deficit, reduction in fiscal deficit,
prudent debt management consistent with fiscal sustainability, greater transparency in fiscal
operations of the government. Compliance to the Fiscal Responsibility and Budget ManagementAct is monitored by the State Legislature. Department of Expenditure, Ministry of Finance
generally follows the fiscal limits mandated by the accepted recommendations of the Finance
Commission while exercising the powers to approve borrowings by States under Article 293 (3)
of the Constitution of India.
*****Annexure referred to in the answer of part (a) of Lok Sabha unstarred question no. †3940
for 18.08.2025
Details of the loan taken by the State Governments from the Central Government during
the last three years and FY 2024-25 (BE)
(Rs. in crore)
S.No. States 2021-22 2022-23 2023-24 (RE) 2024-25 (BE)
1 Andhra Pradesh 4,896 8,411 5,011 18,250
2 Arunachal Pradesh 371 1,564 2,557 2,000
3 Assam 757 4,436 5,211 4,258
4 Bihar 9,527 10,155 11,933 2,500
5 Chhattisgarh 5,777 3,700 4,600 4,000
6 Goa 1,013 573 586 465
7 Gujarat 13,675 5,870 7,634 11,000
8 Haryana 7,537 1,270 1,093 1,093
9 Himachal Pradesh 3,588 740 890 902
10 Jharkhand 3,246 3,627 5,274 4,800
11 Karnataka 20,179 5,266 6,254 6,855
12 Kerala 9,465 2,524 850 2,100
13 Madhya Pradesh 12,614 10,665 14,500 12,500
14 Maharashtra 18,625 10,236 16,354 9,721
15 Manipur 254 575 450 600
16 Meghalaya 515 1,105 70 90
17 Mizoram 310 300 768 510
18 Nagaland 315 518 912 37
19 Odisha 7,606 1,019 5,572 6,713
20 Punjab 12,586 963 972 2,500
21 Rajasthan 9,336 7,084 10,199 10,283
22 Sikkim 304 553 1,124 1,037
23 Tamil Nadu 13,642 10,255 13,123 18,532
24 Telangana 4,784 2,501 1,948 3,900
25 Tripura 526 358 762 961
26 Uttar Pradesh 10,748 8,823 20,939 21,539
27 Uttarakhand 3,686 1,219 1,500 1,660
28 West Bengal 8,515 5,111 7,416 9,330
BE-Budget Estimates
RE-Revised Estimates