Public debt up 3x, states victims of 'coercive federalism': Congress

Expressing concern over the appreciable jump in states' debt highlighted by CAG, Congress said the public debt of states has trebled in the last decade, rising from Rs 17.5 lakh crore in 2013 to Rs 59.6 lakh crore in 2022. It said states are victims of " coercive federalism " being followed by the Modi government which is not sharing revenues with them as desired, accusing the Centre of playing "cess politics".

Congress Rajya Sabha MP Randeep Surjewala said the public debt of states now amounts to 23% of the combined GSDP of 28 states, but states are being stripped of their fiscal independence through the Modi govt's handling of the GST Compensation Cess and arbitrary central levies. He said this has resulted in "double jeopardy" for states of mounting debt and shrinking revenues.

"Rs 1,70,000 crore is collected every year from 'cesses and surcharges', but the Centre keeps it without sharing anything with states. 'Compensation Cess' was created to pay the states for GST losses, which ended in June 2022. Now, the same cess is only used to repay central loans . Beyond Oct 2025, there is no constitutional mandate to continue with it, yet the Centre wants to hold it exclusively," he said, demanding that the Centre share the cess with the states for the coming 10 years.