The state borrows ₹5,000 crore more as debt mounts to ₹3.75 lakh crore; Ladli Behna Yojana comes under scrutiny
Team Clarion
BHOPAL – The Madhya Pradesh government has taken another loan of ₹5,000 crore this week, further escalating its financial burden. This borrowing, executed in two tranches via the Reserve Bank of India’s Mumbai branch, includes ₹2,500 crore repayable in 20 years and ₹2,500 crore due in 14 years. With this, the state has borrowed ₹25,000 crore in the current financial year, adding to an already staggering debt of ₹3.75 lakh crore.
The current debt exceeds the state’s annual budget of ₹3.65 lakh crore, making every Madhya Pradesh citizen effectively a debtor to the tune of ₹50,000. Financial experts are expressing concern over the state’s growing liabilities, much of which are being attributed to welfare schemes like the Ladli Behna Yojana, introduced in 2023 to provide direct cash assistance to women.
A review of the past two financial years shows a consistent pattern of borrowing. In 2023-24, the government took multiple loans, including ₹2,000 crore on 31 January 2023, and several tranches of ₹3,000 crore through February and March. The trend continued in 2024-25, with additional borrowings on almost every major calendar month, including ₹5,000 crore each on August 6, September 24, and November 26.
This frequent borrowing has driven the state’s debt to historic highs, raising questions about the sustainability of its fiscal management.
A significant portion of these borrowings is believed to fund populist schemes like the Ladli Behna Yojana, which initially allocated ₹12,000 crore annually to provide ₹1,000 per month to women aged 23 to 60. The scheme, now revised to ₹1,250 per month, requires even greater financial resources.
Economic analyst Rajeev Sharma voiced concerns, saying, “While such schemes offer immediate relief to beneficiaries, the rising debt limits the government’s ability to invest in long-term infrastructure and development projects.”
The scheme, which aimed to empower women economically, has been criticised for its potential to derail funding for education, healthcare, and job creation.
Defending its borrowing strategy, the state government claims the funds are directed toward strengthening infrastructure and bolstering economic development. “These loans are being utilised for rural infrastructure, water resources, energy projects, and road development to ensure long-term growth,” a spokesperson explained.
The Fiscal Responsibility and Budget Management (FRBM) Act permits state governments to borrow up to 3% of their gross domestic product (GDP), with an additional 0.5% allocated for special sectors. For Madhya Pradesh, this translates to ₹65,000 crore of permissible borrowing this year, a cap the government appears on track to approach.
The opposition Congress party has been vocal in criticising the state’s financial decisions. State Congress spokesperson Abhinav Baroliya accused the government of mismanagement. “The state continues to take enormous loans, yet public welfare projects are languishing. Roads remain in a poor state, and the healthcare system is failing,” he said.
Baroliya further pointed out the disconnect between the government’s claims and ground realities. “If this money is not being spent on development, where is it going? Inflation and unemployment are already choking the public, and now this debt burden is set to make matters worse,” he added.
Financial experts warn that over-reliance on loans could have severe repercussions for the state’s economy. With a significant portion of funds being channelled into free schemes and subsidies, the long-term capacity to finance infrastructure and generate employment may be jeopardised.
Economist Pooja Verma remarked, “The debt spiral not only limits fiscal freedom but also raises risks for future generations. Balancing welfare with growth is essential to ensure sustainable development.”
The Ladli Behna Yojana, while popular among its beneficiaries, has faced scrutiny for its hefty financial requirements. Originally envisioned as a ₹60,000 crore project over five years, it now demands additional funds due to its monthly assistance increase.
Critics argue that while the scheme empowers women in the short term, its long-term viability is questionable. They fear that the government’s focus on such schemes may come at the expense of critical sectors like education and healthcare.
However, the government remains steadfast in its stance, claiming that the scheme has significantly uplifted women and contributed to their financial independence.
As Madhya Pradesh continues to grapple with its burgeoning debt, tough decisions lie ahead. Balancing populist policies with developmental priorities will require fiscal discipline and transparency.
For now, the growing debt burden remains a pressing issue, with citizens and experts alike questioning the government’s approach. Whether these loans will translate into tangible benefits for the state or further strain its finances remains to be seen.
