CAG shows finances in the red
Says state headed for debt trap as half of financial liability of ` 1.12-lakh crore has to be paid in 7 years
CHANDIGARH: Despite the tall claims made by the SAD- BJP gover nment, the principal accountant general presented an abysmal picture of Punjab finances while issuing a loud and clear warning — the state is headed for a major debt trap as half of the financial liability of whopping ` 1.12- lakh crore has to be paid back in the next seven years.
Releasing three of the four reports of the comptroller and auditor general (CAG) for 201415, principal accountant general Jagbans Singh said Punjab’s revenue expenditure (non-productive) was on the rise while the capital expenditure (productive) had gradually declined. He said a large part of the expenditure was done on repayment and servicing the hefty loans, leaving very little money with the state to spend on development activities.
Other than the state of the finances, the reports released on Monday also pointed out several instances of misappropriation of funds worth crores of rupees, besides highlighting the failing fiscal health of the public sector units.
The revenue receipts grew at an annual average rate of 8.27% during 2010-11 to 2014-15, whereas revenue expenditure grew at an annual average rate of 8.34%. The revenue expenditure (non-productive) continued to constitute a dominant portion (93 to 95%) of the total expenditure during this period. The increase in revenue receipts in 2014-15 (`4,000 crore) was also mainly due to increase in grants from government of India.
The revenue expenditure (non- productive) increased by ` 5,000 crore, whereas capital expenditure (productive) increased by ` 900 crore. The capital expenditure, however, was only 33% of the projections made in the fiscal consolidation roadmap.
The revenue deficit rose to ` 7,600 crore from a deficit of ` 5,300 crore in 2010-11. The government did not contain the revenue deficit within limit of ‘zero per cent’ prescribed in the fiscal consolidation roadmap.
The public debt increased to ` 1.12- lakh crore from ` 75,000 crore in 2010- 11. A major portion of borrowings was utilised for repayment of earlier borrowings (47 to 70%) and revenue expenditure (20 to 39%). Only 8 to 19% of the borrowings were utilised for capital expenditure during 2010-15.
“If this practice continues, Punjab would not be able to generate additional revenue to service its debt and it would have no option but to raise new borrowings every year to repay the borrowings of earlier years,” states the report.
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. “This is an alarming position and the state is heading towards a serious debt repayment position, which is termed as debt trap,” warns the report.
Though the debt-GSDP (gross state domestic product) ratio at 32% was within the target fixed (38.7%) under the Fiscal Responsibility and Budget Mana g ement Act, yet the borrowed funds were mostly used for redemption of past debts. As much as 23% of the revenue receipts were used to service the debts during the current year.