While replying to a question in the Budget session of Assam Assembly on March 24, Chief Minister Tarun Gogoi acknowledged that the per capita burden of the State's public debt now comes to Rs 6,806 at current prices. It means that the loan burden for a family on an average works out to around Rs 34,000. If we accept the figure for per capita income as projected in the Chief Minister's Budget speech at Rs 20,166 at current prices for the outgoing fiscal year, it would mean that the loan burden for every person, on an average, accounts for 33.7 percent or more than one-third of his income. It may be noted here that the quantum of public debt borrowed from diverse sources like market, financial institutions, State provident fund, the Centre and international institutions, mounting from Rs 14,271 crore in 2000-01 to more than Rs 20,000 crore in 2007-08 has plunged the State into a debt trap or a situation in which the Government has no option but to contract a fresh debt in order to repay the old debt. With budgetary expectation of State tax receipts of Rs 3,512 crore in 2007-08, the debt servicing liability during the year at Rs 2,825 crore alone will claim almost 80 percent of the State's tax revenue earnings or 12 percent of total budgetary expenditure. This is in spite of attaining surplus in revenue budget for the last two years and also the benefit of re-scheduling as well as waiver of debt due to fiscal discipline under the FRBM Act of 2005 in the State. However, it should be noted here that the ratio of interest payment to revenue receipt has come down below 18 percent, the limit which was recommended by the Finance Commission. However, the burden of debt servicing is large because the interest charges are high for most of the loans like 11.5 percent charged by GICI, the highest of 12 percent by NABARD, 11.75 percent by HUDCO, 9 percent by World Bank and 10.5 percent by ADB. In spite of this, the debt-income ratio of the State, currently at around 30 percent, is of course not alarming. But what is important is that the public debt should be used as an instrument of fiscal policy to attain economic development. This can be done through its investment in productive projects so that repayment can be done from the returns earned. Thus, the costly loans used for consumption purposes like administrative services or salary payment as in earlier years or other departmental necessities and security services, etc must be avoided at any cost. What is also uncomfortable is that the party in power has always avoided seemingly unpopular but urgently necessary subsidy cut on non-merit goods and services. On the other hand, there is still a huge scope of increased revenue earnings and reduction in misuse of public expenditure if the reports of CAG and PAC are any indication. Again, most of the Government companies running under heavy subsidy financed by borrowed funds have gone sick. Unless the trend is reversed, the development of the State will remain anutopian goal.