Punjab is in an economic slump and a debt trap, said the State Finance White Paper presented to the State Assembly on Saturday. The paper presented by Finance Minister Harpal Singh Cheema blamed previous governments for the fiscal mess.
According to the document tabled ahead of the presentation of the state budget in the House, ”Today, Punjab is in an economic slump and a debt trap.” ”Previous governments, instead of enforcing the necessary correctives, continued to slide the debauchery, as evidenced by the uncontrolled increase in spending of unproductive revenues, undeserved gifts and subsidies, the virtual collapse of capital and social sector investments vital for future growth and failure to realize its tax and non-tax revenue potential,’ he said.
The white paper states that the current effective debt stock of Punjab stands at Rs 2.63 lakh crore, or 45.88% of SGDP. “Current government debt indicators are probably the worst in the country, driving it deeper into the debt trap,” he said.
The previous government claimed to bring fiscal prudence to the management of state finances while quietly choosing not to discharge outstanding state government debts, he said. Regrettably, they also followed their predecessors and while resigning from office handed over a staggering immediate and medium term liability of Rs 24,351.29 crore which the new government has to discharge over the next few years, the document states. . Over the past five years, government debt has increased by 44.23%, which translates to a compound growth rate of 7.60% per year.
The state is in a classic debt trap – a significant portion of the annual gross debt/borrowing taken out by the government is earmarked for repaying old debt and paying interest and not for future development and prosperity of the State, in accordance with the document. He pointed out that the stock of government debt increased from Rs 1,009 crore in 1980-81 to Rs 83,099 crore in 2011-12 and then to Rs 2.63,265 crore in 2021-22.
According to the White Paper, the 6th Punjab Salaries Commission, which was otherwise due from January 2016, was set up in July 2021, with considerable delay and haste with only six months before the elections in the Punjab. ‘State Assembly. ”The previous government was unable to pay the revised salary arrears with effect from 1 January 2016 to 30 June 2021 due to the implementation of the 6th Punjab Salaries Commission. The pending liability on this account alone is expected to be around Rs 13,759 crore,’ he said.
The amount of electricity subsidy arrears and interest thereon which has been stated by Punjab State Power Corporation Limited (PSPCL) to be payable to it for agriculture, domestic and industry is Rs 7,117, 86 crore. State tax revenue as a percentage of total revenue fell from 72% to 48% in 2021-2022, indicating a noticeable decline in the state’s ability to raise resources internally and greater reliance on state finances to Union government transfers. Previous governments, unable to keep pace with the changing framework of indirect taxation, were unable to shore up the state’s own tax revenues and became overly dependent on GST offsets and tax deficit relief. revenue by the 15th Finance Committee. The GST compensation scheme ends in June and based on trends from previous years, the state government would see a large hole left in its finances to the tune of Rs 14,000 crore to Rs 15,000 crore in 2022- 23 himself. To revive Punjab to its former glory days, a serious overhaul of expenditure commitments coupled with direct revenue enhancement measures must be made.
To shore up state finances, economic recovery and growth, and reduce reliance on debt, structural and policy initiatives are needed with unprecedented levels of ground-level enforcement, the document suggests. among the corrective measures.