Punjab in ‘debt trap’, finances in free fall, says govt’s white paper
Cong outlines crisis it has inherited, attributes it to AkaliBJP govt’s poor fiscal mgmt
CHANDIGARH:In a scathing indictment of fiscal management during the Akali-BJP rule of 10 years, the Congress government, in a white paper tabled in the assembly on Monday, said the state is in the “tight grip of a debt trap” and its finances in a “free fall”.
Painting a grim picture a day before the first budget of the new government, the white paper on state finances – one of the two tabled by finance minister Manpreet Singh Badal – blamed lack of fiscal prudence and indiscriminate raising of loans, especially unproductive borrowings and ‘book-cooking’, for the debt trap.
As an almost empty state treasury is a huge worry for Capt Amarinder Singh-led government, the white paper has political undertones, indicating how much to expect from the budget.
The paper puts the outstanding debt, power bonds, loans of state entities and loan to cover cash credit limit gap at ₹1.87-lakh crore, as on March 31, 2017. If the state guarantees are added, it jumps to ₹2.08-lakh crore.
“The state finances are in a free fall, as the government revenue has not kept pace with its expenditure, leading to ballooning revenue and fiscal deficits,” reads the 143-page white paper, summarising the fiscal woes. “A high percentage of expenditure is already committed, leaving hardly any fiscal space. It is inflicted with structural imbalance and, if no corrective measures are taken, it will take a heavy toll on the future development of the state.”
EMPTY TREASURY WORRIES CAPT GOVT
The paper notes that apart from meeting the day-to-day challenge of keeping the treasury afloat for the routine administrative expenditure, the state is constantly facing grave paucity of resources for financing the capital expenditure. “The situation is alarming.”
The Congress came to power with the promise of farm debt
waiver, unemployment allowance, mobile phones, jobs and a lot of other cash-guzzling freebies.
While chief minister Capt Amarinder Singh announced debt write-off after the two white papers were tabled, his government lacks the financial wiggle
room to implement most of its promises and is expected to stagger them.
In the past, too, the governments in states of Haryana, Tamil Nadu, Maharashtra and Kerala have presented white papers to bring out fiscal mismanagement of their predecessors
and to defer or stagger implementation of their promises.
REVENUES MORTGAGED, PROPERTIES PLEDGED Another disturbing feature of fiscal management was the Akali-BJP regime’s penchant for abusing government entities — such as Punjab Infrastructure Development Board (PIDB), Rural Development Board (RDB) and Punjab Urban Development Authority (PUDA) — to indiscriminately raise loans by mortgaging their future revenues or by hypothecating immovable properties at their disposal.
The three undertakings raised loans to the tune of ₹12,643 crore. A part of this debt also flowed into the state treasury as “informal debt”, which stands at ₹4,435 crore.
“Raising loans in this manner is nothing short of selling the family silver to run your kitchen. They provided a handy window to fund the populist programmes of the then ruling dispensation,” the white paper points out.
The loans were raised as an off-budget exercise and totally escaped due scrutiny, legislative approval and audit by the Comptroller and Auditor General (CAG) . The government has hinted at carrying out a special audit to ascertain whether the loans were properly accounted for and utilised in accordance with their statutory mandate.
GROWTH BELOW ALL-INDIA AVERAGE
The state’s financial decline, according to the paper, has seamlessly merged into its economic decline, making it one of the slow growing states of the country.
During the last 10 years, the growth rate of Punjab remained lower than the all-India average, except in 2013-14, when it was slightly higher. The growth rate was as low as 4.2% against 7.5% at all-India level in 2014-15.
The average growth of the Gross State Domestic Product (GSDP) recorded from 2006-07 to 2015-16 was 6.37%, which was lower than the average growth recorded by Goa (10.68%), Bihar (10.08%), Gujarat (9.70%), Madhya Pradesh (8.54%), Haryana (8.30%), Maharashtra (7.71%) and Tamil Nadu (7.66%). Also, the state, which held the top position in per capita income for a long time, has slid to the seventh position among the major states.