For well over a decade, Punjab, once one of the most prosperous states in the country has been weighed down because of a huge debt burden having made little headway even when most states managed to improve upon their fiscal record during the high growth years of 2004-05 to 2008-09. The state’s finance minister, Parminder Singh Dhindsa spoke to Kanchan Vasdev on the fiscal challenges and how the state is addressing it.
How bad is the fiscal crisis in Punjab? How much have things worsened in the last one year or so?
We do not have any fiscal crisis as such. We have an overdraft of Rs 500 crore till date. Overdraft is a normal process. It goes up by the start of every month and comes down by the end when we receive various collections. We are doing better compared to last two years. In 2012-13 there was an overdraft of Rs 1,400 crore which came down to Rs 900 crore last fiscal. It is expected to go down further in the current fiscal.
What burns a hole in the state’s pocket?
We have a fat salary bill amounting to Rs 24,000 crore to Rs 25,000 crore. It is a cause of concern for us. The bill has been growing by 10-15 per cent every year in the last five years. The implementation of pay commission reports, arrears and installments of DA really burn a hole in our pocket.
Are you finding it difficult to pay salaries or sustaining welfare schemes?
We have no problem in paying salaries. All the salary bills are up to date. The only problem was in clearing bills under grant-in-aid schemes. Also, there is a two-month delay in paying provident fund and post-retiral benefits to those who have superannuated. A month or two delay is acceptable. Our welfare schemes are on course.
What do you put the blame to for the current fiscal scenario? Is it that revenues have slowed?
Punjab has been a revenue surplus state in the past. The major fiscal depression faced by the state is due to its fight against terrorism. We have not been able to pay back the special term loan extended by the Union government during the militancy era. Borrowings increased. The total debt on account of this loan was likely to be Rs 1,13,053 crore by March, 2015. We are caught up in this debt-cycle where the interest keeps on compounding.
How much would you blame the Centre for the current situation?
The Centre is not to be blamed. They themselves are grappling with a financial crisis. The previous governments were biased towards Punjab. We have been asked to foot terrorism-related bills. Then there was no financial aid given to us in the past. We always faced step-motherly treatment.
The Finance Commission has submitted its report, what are your expectations? What is the kind of support you expect from the Centre?
We have requested the Commission to recommend state -specific grants of Rs 9,639 crore for the state for the period 2015-20. The government has also sought from the Commission that at least 50 per cent of Central taxes should devolve to states. We have also demanded that weightage should be given to SC/ST population of the state and GSDP of the state to make devolution criteria just and fair. Punjab tops the list of state with a high percentage of SC/ST population having a share of 31.9 per cent of SCs in its total population. These are genuine demands and we are not asking for the moon.
How keen are you on GST? Do you think it is feasible to implement?
We are for GST. It will improve the competitiveness of our market. All that we want is our purchase tax may not be subsumed or we should be compensated for the revenue loss.