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AAP’s white paper in Budget session: Cong govt left behind liability of Rs 24,352 cr

Of this, Rs 13,759 crore is the liability towards non payment of arrears of sixth Pay Commission and Rs 7,117.86 crore is the liability towards the power utility of the state. The previous government could not discharge the unpaid pending liabilities of Rs 1747.57 crore (from 2016-17) under the atta-dal scheme.

Punjab Chief Minister Bhagwant Mann (PTI Photo)

The AAP-led Punjab government on Saturday slammed the previous Congress government for leaving an immediate liability of Rs 24,352.29 crore that the incumbent government would have to discharge over the coming years.

Of this, Rs 13,759 crore is the liability towards non payment of arrears of sixth Pay Commission and Rs 7,117.86 crore is the liability towards the power utility of the state. The previous government could not discharge the unpaid pending liabilities of Rs 1747.57 crore (from 2016-17) under the atta-dal scheme. The liability has increased to Rs 2,274.43 crore in the last fiscal. An amount of Rs 1200 crore is pending towards the loan waiver scheme, the white paper said. This is besides a debt of Rs 2.63 lakh crore on the state till the end of current fiscal which is 45.88 per cent of GSDP.

In addition, state agencies, boards, corporations have a debt of Rs 55,000 crore of which Rs 22,250 has been guaranteed by the state government. Interestingly, former finance minister Manpreet Singh Badal had stated that he was leaving the state exchequer in a better fiscal health as the treasury was not closed and no pending bills were being reported.

In a white paper tabled by finance minister Harpal Singh Cheema, the government has stated that the current debt indicators of the state are probably the worst in the country, pushing it deeper into a debt trap. The 73-page white paper, holding successive governments responsible for the fiscal mess, came two days before the AAP government will be presenting its first budget in the Assembly, after taking over the reins of the state. AAP has promised several freebies, including 300 units free power and Rs 1,000 for all women voters in the state every month. While the 300 units of power would be rolled out from July 1 onwards, the government is yet not prepared to deliver the preroll promise of Rs 1,000 for women every month.

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“Today, Punjab is in an economic morass and is in a debt trap,” said the document on the state finances adding that the state’s condition can be explained as a fiscal straight jacket, with no fiscal space, as committed expenditure on salaries, wages, pension and retirement benefits and interest payments as percentage of total revenue receipts averaging around 89.63 per cent in past 10 years. “The state is in a classical debt trap, a significant portion of the annual gross debt/borrowings contracted by the government is being applied towards repayment of old debt and interest payments and not for future developments and prosperity of state.”

The white paper accuses the previous governments of fiscal profligacy, unchecked increase in revenue expenditure, freebies and unmerited subsidies, virtual collapse in the capital and social sector investments and non realisation of its potential of tax and non-tax revenues that had led to a whopping debt of Rs 2.63 lakh crore.

The white paper stated that the previous government professed of bringing fiscal prudence in management of state finances while discreetly choosing not to discharge the pending liabilities of the state. It has stated that as the GST compensation regime is ending in June 2022, the state government would be staring down a big hole left in its finances to the tune of Rs 14,000 to Rs 15000 crore in the current fiscal. This will be a “fall off the cliff” scenario for the state. It has also said that the revenue from sand had been extremely low at Rs 137 crore during 2021-22.

The revenue expenditure has remained consistently above 90 per cent mark and percentage of total revenue receipts has remained at more than 115 per cent mark, leaving very little scope for development expenditure.

The outstanding debt has increased from Rs 1,009 crore in 1980-81 to Rs 83,099 in 2011-12 and to Rs 2,63,265 crore in 2021-22. The AAP government’s white paper also talks about the cash Credit Limit (CCL) gap of Rs 31,000 crore which was finally converted into a loan and the state has to service liability of Rs 3240 crore till September 2034 resulting in a total outflow of Rs 57,358 crore.

Coming down heavily on the Charanjit Singh Channi government, the white paper read that the previous government resorted to reckless spending in an attempt to salvage its political fortunes during the fag end of its tenure. Change of guard in the previous regime came at a huge cost to state exchequer. Since September 20,2021, a total of Rs 9,047 crore worth of schemes, one time settlements and waivers were announced in a desperate attempt to consolidate the voters. It has put enormous burden on the already fiscally strained state treasury.

“Announcements were made regarding reduction in power prices, water charges, cut in petrol and diesel prices, and VAT settlements. All these decisions had financial implications and were at the expense of present and future resources of the state to achieve political mileage.”

The discretionary funds, released earlier to CM and ministers was at Rs 50 crore and Rs 5 crore respectively. However, during the fag end of the previous government, it was increased to Rs 150 crore and Rs 17.50 crore respectively for the new seven ministers.

The white paper has also stated that the “neck-breaking” pace at which the debt has grown over years is a case study in itself. For Punjab, last decade is nothing short of a “lost decade.” To compensate for this, the state has to cautiously take debt and invest heavily in high quality capital expenditure creation.

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First published on: 26-06-2022 at 11:01:42 am
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