Punjab is currently one of the most fiscally stressed states with the lowest level of capital expenditure, the experts’ panel led by noted economist Montek Singh Ahluwalia has said. The Group of Experts was set up last year by CM Amarinder Singh to bring Punjab’s economy back on track.
In its final report submitted recently, the Group of Experts has suggested measures such as reducing average cost of government debt, banning recruitment in police, bringing pay scales of state government employees at par, and increasing deduction towards Professional Tax beside others. The report, however, carefully sidestepped the issues of power subsidy and farm loan waiver.
The panel has stated that unless measures are taken to correct the fiscal situation over the next few years, it will not be possible to achieve the objective of restoring Punjab to its pre-eminent position.
“We recognise that bringing about a structural improvement in the state’s financial situation is not possible in the middle of a pandemic-induced contraction which has widened the fiscal deficit of all states and the Centre. However, a concerted effort needs to be launched once post-pandemic normalcy is achieved,” the panel has said.
The expert group has suggested formation of another experts’ panel for preparing a long term fiscal adjustment strategy.
“We recommend that the Punjab government should appoint an expert group that prepares a longer term fiscal adjustment strategy, which could be implemented over the next five years, which would provide a guide to resource availability over this period and the scope for capital investment consistent with the objective of reducing the fiscal deficit.”
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