Punjab headed for a debt trap: CAG on budget eve

CHANDIGARH: A day before Punjab finance minister Parminder Singh Dhindsa presents the SAD- BJP government’s last budget before the polls due next year, the comptroller and auditor general (CAG) has warned of an impending “debt trap”. Reason: Of the debt of ` 1.12-lakh crore (which has, in fact, risen to over ` 1.2-lakh crore since the report compilation), over half has to be paid back within the next seven years.

Deputy chief minister Sukhbir Singh Badal has been insisting that debt is “productive” to “stimulate” the economy, but the CAG reports also underline how it was much lower at ` 75,000 crore in 2010-11.

Most loans (47 to 70%) were being used for repayment of earlier loans.

In fact, nearly a quarter of all revenue receipts of the state were used to repay debts in 201415, the fiscal year covered by the latest CAG reports.

“[Punjab] government has to repay 11% of its debt between 1-3 years, 20% between 3-5 years and 19% between 5-7 years. It signifies that state has to repay more than 50% of its debt in the next seven years,” says the report, adding, “This is an alarming position and the state is heading towards a serious debt repayment position, which is termed as debt trap.”

Principal accountant general Jagbans Singh, while releasing the CAG reports ( 2014- 15), underlined that the state’s nonproductive expenditure, such as that on repayment of the loans, was on the rise; and capital expenditure on productive activities was declining.