Fund-crunched Punjab has roped in the prestigious National Institute of Public Finance and Policy, (NIPFP) to bail the state out of fiscal crisis. Burdened by a huge debt of Rs 2.08 lakh crore,a fat salary bill of over Rs 20,000 crore, power subsidy that has crossed Rs 11,500 crore this fiscal and a loan against food grain scam worth Rs 31,000 crore, he state is struggling to get out of the debt cycle.
Institute Director Dr Rathin Roy’s team has already met the Chief Minister Amarinder Singh and had marathon meetings with Punjab Finance Minister Manpreet Singh Badal, Expenditure Commission Chairman KR Lakhanpal and officials of the department on January 24 and 25.
Sources in the government told The Indian Express that the meeting took a strong view of the salary component that was burning a hole in state exchequer. The government has been advised not to constitute another Pay Commission for a few years till the state recovers from the shock.
Also, the meeting frowned upon the power subsidy, “We are already walking on the path of rationalising the subsidy. Let us see as both salary and subsidy are political decisions. But someone has to take them,” said a functionary of the government indicating extreme measures were the need of the hour to put the state back on track.
NIPFP is an autonomous research institute under Government of India and helps Centre and states in proper fiscal management. It also helps in process of policy making.
Punjab Finance Minister Manpreet Badal told The Indian Express, “We have asked the institute to help us out of this trap. Those people have the expertise and they have already met the Chief Minister. We have given them our factual fiscal position. They are going to give us solutions towards efficient fiscal planning so that we are able to get out of the debt trap.”
Punjab paid Rs 17,273 crore towards debt servicing in 2016-17 fiscal, and the debt servicing amount is all set to touch Rs 22,396 in the current fiscal.
While the state was also paying a fat sum towards repaying the debt, another term loan of Rs 31,000 crore towards the alleged food scam has worsened the matters for the government which was paying Rs 270 crore every month to settle the interest (at 11 per cent) on the term loan.
The state’s power subsidy bill is estimated to be Rs 11,500 crore. While government was giving free power to farmers, it has also subsidised power to industry. The amount includes a pending bill of Rs 3000 crore for the last fiscal that would be borne by the incumbent government.