3 min readChandigarhNov 4, 2009 12:20 AM IST
First published on: Nov 4, 2009 at 12:20 AM IST
Its debt limit fast approaching,state may have to seek Centre’s help to stay afloat
Managing finances in Punjab has become an art of jugglery. The cash-starved finance department has been diverting funds from central schemes and holding back payments of government departments to ensure that it does not default on salaries. However,come 2010,the tightrope walk may become too hard to continue. The financial crisis,say sources in the department,will come to a head as early as the beginning of next year when the government may not even be able to pay salaries and pensions which together account for Rs 1,000 crore per month.
As it prepares to do a mid-term review of its ambitious annual plan worth Rs 8,400 crore,the state is unable to clear bills of infrastructure projects being undertaken under the annual plan by the public works,irrigation and public health departments. The state is hoping to meet these out of funds received this month under various central schemes such as Pradhan Mantri Gram Sadak Yojana (PMGSY),National Rural Health Mission (NRHM) and Accelerated Irrigation Benefit Programme (AIBP).
However,it is not delay in payments of bills for construction projects that is worrying the state. “Payments have been delayed but we are trying to ensure that there are funds for important sectors such as roads,irrigation and public health. We are also paying our share in Central schemes to make the most of funds being received under them,” says Finance Minister Manpreet Badal.
But the worst fear is that of defaulting on salaries and pensions,which,together with interest payments on debt,account for more than 80 per cent of the state’s total revenue expenditure. Finance officials,on condition of anonymity,said going by the present state of affairs,the state would not have enough to pay salaries and would also run out of its loan limit two months before the financial year ends,forcing it to seek Centre’s help to stay afloat.
As compared to the Rs 18,000 crore committed expenditure on salaries,pensions and interest payments for 2009-10,the state is raising loans ranging between Rs 500 and 700 crore a month against the total available limit of Rs 6,219 crore. Worse still,there has been hardly any growth in its revenue. Except excise,the state’s revenue from all sources — value added tax (VAT),excise,stamps and registrations,central taxes and transportation — is stagnant.
However,the urgency of the situation has not yet dawned on the state as the problems are not new. The state has been under debt since 1991-92 though the figure has grown from Rs 7,900 crore then to Rs 63,200 crore by this year end. It stopped being revenue surplus since the start of militancy in the state and it still foots highest subsidy bills on welfare schemes. Salaries of its employees are higher than those recommended by the Pay Commission.
Piling woes
Debt by March 2010:Rs 63,200 crore
Interest payments for 2009-10:Rs 5,400 crore
Salaries,pensions for 2009-10:Rs 12,000 crore
Dearness allowance from January 2010:Rs 300 crore
Subsidy bill:Rs 6,000 crore
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