Year into power, Mann govt comes up against reality of massive debt burden

While former chief ministers Rajinder Kaur Bhattal and Parkash Singh Badal are often blamed for burdening the state exchequer with their agriculture subsidies, successive governments have only added to the bill, with the AAP taking it further to Rs 20,000 crore every year.

Questions have been raised about whether the government had the means to pay for the 300 units of free power it promised domestic consumers in the first year of its rule. For now, economic experts say, the government’s decision to not announce the promise of Rs 1,000 assistance to women will give it some breathing space as it won’t be adding to the burden of the state exchequer.

In the 2023-’24 financial year, the government estimates it will have to pay Rs 20,243 crore for free power to farmers and domestic consumers (300 units of free power) and subsidies to industry. It will also require Rs 38,626 crore just for debt servicing. In the last financial year, it repaid Rs 15,946 crore as principal and Rs 20,100 crore as interest on its debt.

But the huge debt burden did not stop the government from announcing a populist Budget, its focus firmly on agriculture and diversification. Finance Minister Harpal Cheema said the government would bring crop insurance for farmers after climate change and inclement weather affected the yield of paddy, wheat, and cotton. A revolving Rs 1,000-crore fund has been set up for diversification and 2,574 Kisan Mitras will be appointed for extension services. The government also announced it would establish a 110-ton palm oil refinery in Khanna and mustard oil refineries to be set up by MARKFED in Budhlada and Gidderbaha.

Among other initiatives for farmers is the increased allocation for Direct Sowing of Rice (DSR) and moong from Rs 25 crore to Rs 125 crore. DSR helps save underground water as aquifers are drying up fast in Punjab. The government has also said it will also come up with the “Bhaav Antar Bhugtan Yojna” for horticulture producers and allotted Rs 15 crore for the scheme. This has been a long pending demand of the farmers to help those who do not get MSP in the market.

To strengthen “Brand AAP” with its other signature schemes, Chief Minister Bhagwant Mann has said the government has set up more than 500 Aam Aadmi clinics, 117 schools of eminence, and provided more than 26,000 government jobs within a year besides repaying Rs 36,000 crore of loans.

The AAP government has identified checking tax evasion as among the chief means of mopping up resources. To start with, a Tax Intelligence Unit has been notified and will be fully functional in the 2023-’24 fiscal to develop systemic tools for the detection and recovery of tax evasion and non-compliance by taxpayers. Experts will also be hired to examine the entire gamut of taxation and non-tax revenue streams to further mop up the state’s revenue, according to Harpal Cheema.

Along the lines of Delhi’s “Bill Le Aao Inam Pao” initiative, the Punjab government will come out with monthly lucky draws to encourage people to take a Bill and then match it in its records. Cheema said this would ensure that GST was not evaded and it would help fill the state’s coffers. But it remains to be seen how effective these two measures are.

The AAP has defended the spending despite the massive debt burden saying that not just Punjab but other states too borrow money to keep afloat. “Not only are we borrowing money, but all other states are doing this. During the SAD-BJP regime from 2007 to 2012, Rs 28,592 crore was added to the debt. Again, during their next term, from 2012 to 2017, Rs 99,304 crore was added to the state’s debt,” Cheema said on Saturday.

But the Opposition is not convinced. Leader of the Opposition Partap Singh Bajwa of the Congress said the government would leave the state “under Rs 5 lakh crore debt” if it lasted five years. His party colleague and Punjab Congress president Amarinder Singh Raja Warring said the Budget had “proved to be the harsh reality check for the government” and called it “an admission of failures and frustrations of the AAP government”.

Shiromani Akali Dal leader Sukhbir Singh Badal accused the AAP of “leading Punjab to financial ruin by increasing debt and performing poorly on all parameters”.