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Friday, August 19, 2022

AAP govt’s white paper on Punjab finances no different than Congress’

Out of the total amount, Rs 13,759 crore is towards non-payment of arrears of sixth pay commission.

The Punjab Cabinet had given the nod to table the White Paper on the state’s finances during the budget session of the Vidhan Sabha, so as to apprise the common man of the state’s present financial situation. (File)

The Aam Aadmi Party (AAP) government’s white paper on finances is reminiscent of a similar document tabled by former Chief Minister Amarinder Singh’s government during the first Budget session of Vidhan Sabha in 2017. Tabled on June 19, 2017, a day before the first budget of the then Congress government, the white paper had indicted 10-year-rule of SAD-BJP from 2007 to 2017. AAP’s document is no different than the Congress one, except that it is 73-page document against Congress’ 143 pager, tabled by the then Finance Minister Manpreet Singh Badal.

At that time also, the white paper had brought to the fore that the state was in a “tight grip of debt trap.” The AAP government’s document too has stated that the Punjab is in an economic morass and debt trap.”

The Congress had also painted a grim picture of finance a day before its first budget and AAP has followed suit. Badal had blamed lack of “fiscal prudence and indiscriminate raising of loans, especially unproductive borrowings and ‘book-cooking’, for the debt trap.”

Incumbent Finance minister Harpal Singh Cheema’s white paper also accuses the previous governments in the state 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.”

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Exactly five years ago, the state’s debt was Rs 1.87-lakh crore. Five years later, the debt is at a whopping Rs 2.63- lakh crore. Incumbent government’s white paper has stated that Punjab’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 previous government’s paper had stated that, “A high percentage of expenditure is already committed, leaving hardly any fiscal space. It is inflicted with structural imbalance and, if no corrective measures are taken, it will take a heavy toll on the future development of the state.”

About the debt trap also, the current government’s document says, “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.” Compared to this, the previous white paper had stated: “The state finances are in a free fall, as the government revenue has not kept pace with its expenditure, leading to ballooning revenue and fiscal deficits.”

The Congress had also stated that apart from meeting the day-to-day challenge of keeping the treasury afloat for the routine administrative expenditure, the state was constantly facing grave paucity of resources for financing the capital expenditure. The incumbent government 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.

First published on: 25-06-2022 at 01:46:42 pm
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