Growth of Public Debt in Haryana – Dynamism or Misplaced Priorities

The paper made a comprehensive analysis of public debt and outstanding liabilities on Haryana with a view to understand whether public debt is used for accelerating growth and development or it is result of misplaced spending priorities by the incumbent governments mainly by opportunistic pre-electoral manipulations. The paper analysed trends in various dimensions of public debt in Haryana such as deficit indicators, decomposition of gross fiscal deficit, financing pattern of gross fiscal deficit, composition of outstanding liabilities, uses of borrowed funds etc. for the period 1980-81 to 2015-16 using yearly data from studies of state finances report of RBI. To understand current situation of debt sustainability and trends in debt sustainability the paper used indicator based approach and econometric estimation of fiscal response function. The paper highlighted that level of debt in relation to repaying capacity of the state is not high but the uses of borrowed funds need to be directed for the productive purposes. Besides testing our main hypothesis of debt sustainability, the paper also made a comparative analysis for the pre-FRBM and post-FRBM period and also for the election cycle years and normal years.