Chandigarh, June 25
After witnessing years of fiscal mismanagement and reliance on allocations during election years, Punjab could see a course correction, given guidance from the White Paper on State Finance presented by the AAP government in the Vidhan Sabha today.
Rs 2.85 lakh cr total outstanding debt
Rs 43,000 cr unpaid debt from boards of directors, companies
The government is proposing to rid itself of some of its “legacy of losses” by divesting its stake in loss-making companies, councils and crown corporations. The government is also proposing to merge and liquidate some of these 46 entities.
The 73-page document states that these firms, councils and companies had an outstanding amount of Rs 43,204.59 crore as they incurred debt of Rs 54,948.75 crore. The total outstanding government debt is Rs 2.85 lakh crore. The AAP government will divest its stake in these ventures as the return on investment of Rs 23,853.71 crore by the state government in these entities is only 0.016%.
The whitepaper also says there is a need to make up for the “lost decade” (including the Akali-BJP rule of 2012-17). He also mentions how concessions granted by the previous government last year had pushed the state further into financial mess.
The white paper comes just two days before the government presents its first budget proposals for 2022-23. This shows that the state is caught in a debt trap, where more debt is accumulating to pay off the old one. State finances are in freefall and with the end of the GST compensation scheme this month, it is a “fall off a cliff” scenario, which will see the State have a shortfall of Rs 15,000 crore this year, and Rs 21,000 crore per year thereafter. State debt grew by 44.23% during the five years of Congress’ rule, translating to a compound growth rate of 7.60% per year, the white paper reveals.
The state of finances, as revealed today in Finance Minister Harpal Cheema’s White Paper, may not leave the government with enough fiscal space to deliver on all of its pre-election promises immediately.
The previous Congress government left them with a staggering immediate and mid-term liability of Rs 24,351.29 crores, which the AAP government will have to pay now. Government debt indicators are the worst in the country, the White Paper says.
What the government inherited
- Rs 72,944 cr of the principal amount of the loan to be repaid until 2027
- Rs43,204.59 cr as unpaid debt by councils and societies
- Rs 19,605 cr to be spent until 2030-31 for the repayment of the loan for the UDAY program
- Rs13,759cr unpaid revised salary arrears
- Rs 7,117.86 cr unpaid powergrant
- Rs 2,274.43 cr liability underAtta Dal Diet
- Rs 1,200 cr unpaid crop loan waiver
- Rs 3,240 cr debt service liability for conversion of credit limit gap of Rs 30,584.11 cr into long term loan
- No GST compensation from next month would mean a loss of Rs 15,000 crore this financial year
- Punjab’s tax revenue fell from 72% in 2011-12 to 48% in 2021-22
- Transfer from central funds increased by 847% from Rs 3,806 cr in 2006-07 to Rs 36,027 cr in 2021-22, but overall state revenue increased by 224% from Rs 12,990 cr to Rs 42,109 cr