Punjab in debt trap with little funds for devp

A scrutiny of the major fiscal indicators compiled by the Finance Department for 2012-13 suggests that gross borrowings for 2011-12 stood ar Rs 10,944 crore. The repayment by way of principle came to Rs 2686 crore and interest Rs 6530 crore. The annual interest payment in terms of percentage of revenue receipts in 2012-13 would come to about 23.50 per cent,which would perhaps be one of the highest in the country for any state as most of the money it takes as loan goes into repaying interest on the outstanding debt. Punjab’s debt,which will zoom to Rs 87,518 crore by this period from Rs 78236 crore during 2011-12 would amount to 31.51 per cent of the gross state domestic product.

According to these indicators,total revenue receipts for 2012-13 would be 38043 crore while total expenditure would be Rs 41166 crore. Thye total revenue receipts include Central transfers of Rs 8926 crore-share in Central taxes Rs 4202 crore and grant-in-aid from Centre at Rs 4724 crore,State’s own tax revenue of Rs 23842 crore-Rs 14213 crore from VAT,Rs 3800 crore state excise,Rs 3375 crore stamp duty and registration and Rs 1540 crore electricity duty etc. The state’s own non tax revenue coming from Punjab Roadways,general services etc would be Rs 5274 crore.

The expenditure to be incurred would include Rs 4632 crore on power subsidy,Rs 6662 crore on interest payment,Rs 4753 crore on pension and retirement benefits,Rs 6251 crore on education,Rs 3203 crore on Police,Rs 1977 crore on medical and public health,Rs 549 crore on public works.

With little left for spending on development activities,the leading industry body Assocham suggests that the only way left is to “develop infrastructure on its own which builds a good case for public private partnership (PPP) type of initiatives involving multilateral institutions like the World Bank and the Asian Development Bank. The challenge before state government is to address the issue from a holistic perspective keeping in balance between agriculture and industry”.

Assocham General Secretary,D.S.Rawat who has proposed a 30-point growth strategy to the Punjab Government says that “gradually subsidies should be phased out in Punjab and in every state”. He has suggested setting up of industrial clusters for small and medium enterprises involved in food processing,handicrafts,renewable energy and information technology to generate three lakh direct and indirect jobs over the next three years and help inclusive growth. Punjab should rejuvenate agriculture,create manufacturing hubs and accelerate growth in services sector to emerge as land of opportunities.