After a snub from Union Finance Minister Arun Jaitley over its demand for more special assistance, the state government has decided not to pursue the demand assistance and instead pinned its hopes on the 14th Finance Commission.
Burdened by debt of Rs 1.13 lakh crore, and with Jaitley refusing to bail out Punjab, the state government today sought debt relief through loan restructuring and change in criteria for devolution of funds to states from the Finance Commission in New Delhi. It also demanded a revenue deficit grant to the tune of Rs 3,000 crore from the commission.
“We are not taking up the issue of special assistance. We are now looking at debt relief from the 14th Finance Commission. We have submitted a memorandum from our side suggesting that we can be given relief by way of loan restructuring or moratorium on loan repayments,” Finance Minister Parminder Singh Dhindsa told The Indian Express.
Dhindsa was in Delhi today as part of the Empowered Committee of the State Finance Ministers. The Finance Commission attended the meeting.
The state’s committed expenditure stands at 87 per cent of the total revenue, with only 13 per cent left for development of the state. So the government faces “lower” revenue mobilisation and “growing” expenditure. To meet the huge gap, the government has projected making fresh borrowings of about Rs 15,000 crore in the current fiscal.
“Our fiscal problems are rooted in the debt dating back to the days of militancy as well as constant decline in share of the state in central taxes. We have already paid back Rs 2,500 crore to the Union government. We have sought its refund. In fact CM Parkash Singh Badal has written to them quite a few times,” said Dhindsa. He added the state government has also sought change in the formula for devolution of funds to states.
In his letter, Jaitley had written to the state government that central taxes amounting to Rs 4,431.47 crore have been devolved to the state in 2013-14, besides additional central assistance of Rs 887 crore approved in March 2014. Central loans of Rs 370.7 crore were waived from 2005-06 to 2007-08, while loans worth Rs 35.69 crore for central-sponsored schemes outstanding as on January 31, 2010, had been written off. Rs 100 crore has already been released to deal with the waterlogging problem.
In its memorandum to the Finance Commission, the state government has sought weightage for the ST/SC population (15 per cent), GSDP (15 per cent) of the state, fiscal capacity distance (15 per cent), fiscal discipline (5 per cent), area (15 per cent) and population (35 per cent) to make devolution criteria “just and fair”. It has argued that Punjab’s share in central taxes dropped from 2.45 per cent in 1970-75 to 1.38 per cent under the 13th Finance Commission (2010-15).