Views that never cease

Cleaning the fiscal mess, a promise worth keeping - Gobind Thukral

Punjab chief minister Capt. Amarinder Singh finds clearing the fiscal mess a herculean task. Two months into the hot seat, he and his colleagues are discovering, much to their chagrin, more and more of the clutter all around. Before the elections, it was widely circulated that Punjab’s debt burden was Rs   1, 81,727   crore. Now the latest estimates place it more than Rs 2.5 lakh crore. Finance minister Manpreet Singh Badal who is working on a white paper on state’s fiscal health, fears this could be even more.

Punjab’s interest payments are steadily rising, having zoomed up by 58% since 2011-12 to reach Rs 9,900 crore” in 2015-16. These now touch Rs 12,000 crore. Much of revenue earnings of the government now go towards payment of this debt. Basically, this is a classic case of debt trap as   Punjab has to bowwow more to clear its debt installments or to say goodbye to all development plans. Twenty years down the line, Punjab was a revenue surplus state.

Earlier, the government under Akali stalwart Parkash Singh Badal had indulged in borrowing as never before. He had pledged government assets; buildings and even revenue of some of the state run corporations, boards and cooperative apex bodies like MARKFED, MILKFED and Punjab Infrastructure Board [PIDB]. Much of these monies went to fund his Sangat Darshan [Public Durbars] where he let go the government norms and indulged in a   feudal style providing grants to his favourite constituencies. It was his careless though lawful way of pleasing his constituents. He reaped political dividends for long time; finally nemesis caught him this time.

These deferred liabilities and operative liabilities such as loans taken by organizations   like PIDB, Greater Mohali Development Authority, Punjab Urban Development Undertaking, Mandi Board and Power Corporation and food grains corporations and boards are being tabulated to know the exact position.

For the coming fiscal, power subsidy is expected to touch Rs 6,500 crore. The Comptroller   and Auditor General [CAG] has bemoaned that while unbundling the Punjab State Electricity Board, the government placed a financial burden of Rs 25,000 crore on the two new power corporations. These can never come out that trap. The idea of restructuring to bail these out of debt burden is proving counterproductive. Now only the central government can bail these out and this has happened in most of the states. A government note said that the recommendations of the Pay Commission were yet to be implemented. Initially, the GST is expected to subsume most of the cess or taxes. It will take at least four to five years for the center to compensate Punjab on account of reduction in the state’s revenue during this period and till that time; the State’s financial situation will remain wobbly.

This fiscal mess seriously limits the new Congress government’s plans to provide a big relief to the debt burdened farmers. Finance minister has been going around and declaring that Punjab will take a stride bigger than that of Uttar Pradesh in respect of farmer’s debt waiver. The Congress poll promise to waive of the loans of more than 30 lakh farmers in Punjab could well turn out to be a debt waiver for only the marginal farmers owing to the state’s poor fiscal health. Farmers with large land-holdings (more than five acres) could be paid relief.

Government expects the expert committee under the chairmanship of Dr T Haque, former chairman, Commission for Agriculture Costs and Prices to finalise its recommendations by May 30.  But according to state-level Bankers Committee reveals there are 17, 19038 small and marginal farmers expected to be beneficiaries who owe a loan of Rs 36,600. The total agriculture advances to 31.29 lakh farmers stand at Rs 85,361 crore. The crop loan of   21.51 lakh farmers is measured at Rs 63,180.13 crore. This is huge amount to collect and dispense with in one go.

The State government has also decided to get a third party audit of the food account since there is a gap of Rs 31,000 crore in this account. A top government functionary explained that Punjab is covered under centralized procurement schemes. The State procures food grains as an agent of the Central government. And being the agent, all losses or profits out of the operation are that of the Centre; the State of Punjab is not supposed to make either profit or loss out of these operations. But this does not mean that Punjab is absolved of submitting accounts. This has not been happening during the Akali BJP government. There is no other reason to explain that a state with such a fragile financial position carries a burden of Rs 31,000 crore debts on account of gap in the food account. In order to clear the muddle Punjab shall have to repay loans and interests to the tune of Rs 3,250 crore per annum for the next 20 years. Previous government tried to convert Rs 31,000 crore food account gap into a debt, but in vain. This chaos only indicates large scale corruption and negligence.

Capt Amarinder Singh has been keen to redeem is pledges made to the people of Punjab. These would require anything between Rs 50,000 crore and Rs 60,000 crore annually. With nearly empty coffers and the central government saying a big no, this may be well nigh impossible. Yet there are promises that require little funding but more professional commitment.   Good governance and an honest and efficient delivery system can take care of many of the ills that plague the government. Stop teachers, doctors and other government staff that take away major chunk of the revenue as salaries, benefits and pensions, from playing truant. An efficient tax collection system and prudent use of resources could save the day for Capt. Amarinder Singh.

It costs nothing to improve governance as the government is footing the huge bill of the salaries. The Congress government did well in auctioning the sand mines and hopes to collect over R 1,100 crore instead of Rs 200 crore earlier. It also went through e record wheat procumbent by clearing the bills worth Rs 25,000 crore within 72 hours.

But then a new sand mafia like drug mafia and liquor mafia and not to mention the transport mafia has also emerged. It takes next to nothing to control drug mafia   that can save a generation of young people from utter ruin. Some efforts are underway but not enough. The chief minister who has repeatedly declared not to seek another innings can leave a legacy to remember if he provides a just and an efficient government. And, there are enough monies available foe that.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>