With state exchequer already bleeding due to freebies, the fund-crunched Punjab government’s fiscal scenario presents a grim picture with the state having a high debt-to-GDP ratio, as indicated by the RBI’s recent report on state governments budgets for 2022-23 fiscal. Punjab, estimated to have a debt-to-GDP ratio of 47.6 per cent by March 2023 is second to only Mizoram having 53.1 per cent ration, highest in the country. As the states have recovered from the pandemic in the past two years, Punjab’s ratio has improved a little from 48.7 per cent in 2021 and 48.4 in 2022. The Fiscal Responsibility and Budget Management review committee, headed by N K Singh, had recommended a debt-to-GDP ratio of 20 per cent for states. A high debt-deficit burden leaves little room for states to manoeuvre when faced with the next economic shock. Punjab is also among the states having highest interest payments to revenue receipts ratio. This implies that the interest payments account for a sizeable portion of the states’ revenues, leaving them with less room to spend on other areas of priority such as health or education. The state has already borrowed over Rs 35,000 crore in 11 months of its rule. It has not been able to repay instalment of Punjab Mandi Board to the tune of Rs 500 crore towards repayment of loan raised by former Chief Minister Amarinder Singh’s government to waive off farmers’ loans. The Mandi Board has been asked to restructure the loan so that the state pays Rs 100 crore every month. Also, for defaulting the instalment, that was due till December 2022, the government has paid the interim interest for delaying the payment. The Power utility of the state too is bleeding. It had to borrow Rs 500 crore to pay salaries of the last month as the burden of power subsidy is set to cost the state exchequer Rs 22,000 crore this fiscal. Situation has worsened ever since the government has rolled out free 300 units of power to the residents. The state has been unable to take a call on the free bus travel facility for women. It has been costing the exchequer Rs 550 crore every year. The Transport Department had come up with a proposal to rationalise the free travel but the government has not been able to take a political decision. Chief Minister Bhagwant Mann had told the media on Monday that they will be able to generate resources. He had stated that they were able to get 9,000 acres of public land recovered from the encroachers. Renting out this land would get government funds. Also, he had stated that they expected to generate funds from sand. Women and Child Welfare Minister, Punjab, Dr Baljit Kaur has been making announcements that the government would be rolling outRs 1,000 per month for women, a pre poll promise made by the Aam Aadmi Party. However, if the government rolls out this freebie, it would mean extra financial burden. Also, the state is unlikely to meet its revenue targets in the current fiscal, according to the data released by comptroller and auditor general (CAG) regarding the fiscal indicators from April to December 2022. The state’s budget was pegged at Rs 95,378 crore from tax, non-tax revenue and grain-in-aid from Centre’s, the state has been able to mop up only Rs 60,096 crore in first nine months. On the indictors of GST, state excise, stamps and registration, sales tax, land revenue, state’s share in central taxes, the state has been able to achieve 65.86 per cent of the revenue target.
