Under debt, liabilities, freebies’ burden, Punjab struggling to stay ‘fiscally fit’

The government would incure an expenditure of Rs 6947 crore on free farm power and Rs 2503 for subsidy to industry. The Rs 18,000 crore amount also includes the 300 free units to all residents. While Finance Minister Harpal Cheema said that the 300 free units would cost the exchequer Rs 1800 crore, the power experts say that the government would end up paying Rs 3,000 crore as there are also several existing categories that get 300 free units, a freebie extended by former CM Charanjit Singh Channi.

The state government is already grappling with free travel facility for women in public sector buses that has cost the exchequer Rs 600 crore this year and state owned transport bodies are crying foul.

Of the Rs 24,352.29 crore worth fiscal liability passed on to the government by its predecessor, 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, according to the white paper on finances of the incumbent government.

The AAP government also plans to give Rs 1,000 per month to women and is likely to generate a fat bill of Rs 12,000 crore annually. Due to want of finances, the scheme was not announced in the first budget of the government. If the GST compensation regime comes to an end, the state would lose an income of Rs 16,000 crore annually given by Centre as GST compensation. As the government has not levied any new taxes in the budget this year, the government is banking on Rs 9500 crore from excise. It has estimated Rs 350 crore from sand mining even though ahead of the elections, AAP leaders had claimed that it is possible to make Rs 10,000 crore from mining alone.

The state already has a liability of Rs 31,171 crore annually towards salaries, Rs 20122 crore towards interest payments, Rs 15,145 crore towards pensions and retiral benefits. Besides, it would have to pay Rs 27,927 crore towards repayments of advances and loans and Rs 20,000 crore towards repayment of ways and means advances.

Cheema said that the government had already fulfilled four of the five guarantees that it had promised ahead of the polls. The guarantees were 300 units free power, good quality education, Mohalla Clinics, ex gratia of Rs 1 crore to martys and Rs 1,000 to women every month. “Only one is left. We will do that when we have the funds,” Cheema said.

Of Rs 36,068 crore required for debt servicing alone, as per the budget estimates, Rs 20122 crore would go for interest payments alone. The rest Rs 15,946 crore would go towards repayment of debt, excluding ways and means advances.

For ways and means advances, the state would pay Rs 20,000 crore separately which will be spent under the capital expenditure head. To keep afloat, the government plans to make Rs 55050 crore from debt receipts. These include market loans worth Rs 31,804 crore, loans and advances from Central government worth Rs 2446 crore and ways and means advances worth Rs 20,000 crore.

The picture is not rosy in the years to come. The debt of Rs 2.63 crore from last fiscal which is 45.88 per cent of GSDP, debt would go up to Rs 2.84 crore by the end of this fiscal. In addition, state agencies, boards, corporations have a debt of Rs 55,000 crore out of which Rs 22,250 has been guaranteed by the state government.

Cheema had said that their government was working with the right intent to fill the coffers of the state. He had said that the previous government just splurged the GST compensation and no efforts was made to look at other sources of revenue. He said in the first quarter of their regime, they had made better collections that their predecessor besides paying off a debt of Rs 10,500 crore. An amount of Rs 1,000 crore was also deposited in the consolidated sinking fund.