Bureaucrats tightlipped over Punjab's finances

The financial mismanagement in Punjab over the years is in the eye of a storm. Bureaucrats are tightlipped over the financial condition of the state after Chief Minister Parkash Singh Badal denied there was any concrete debt waiver proposal by the Union finance minister and claimed that former finance minister Manpreet Badal had exaggerated the facts.

The past record of state finances, based on the information provided by government officials on condition of anonymity, gives a vivid picture of the burgeoning deficits in the state.

The financial condition of the state was badly hit after many industrial units relocated to Himachal Pradesh following the announcement of a tax holiday for hilly states.

The state has been reeling under debt for over two decades. It had a debt of Rs11,000 crore in 1993-94 when the phase of militancy in Punjab was fading. It stands at an enormous Rs71,000 crore now, tells a senior bureaucrat.

The state has been reeling under debt for over two decades. The state had a debt of Rs11,000 crore in 1993-94 when the phase of militancy was fading in Punjab. It stands at an enormous Rs71,000 crore now, tells a senior bureaucrat.

The public debt of the state was equally divided into central government assistance, employees provident fund (EPF) and market borrowings.

The mismatch between the resources and the committed expenditure kept yawning after that. The populist approach to capture vote bank by both regional and national parties severely undermined the financial strength of the state.

The state did not impose any charges for drinking water, sanitation, canal water, sewerage and property tax other than the subsidies to agriculture sector.

A big cushion came in form of NRI remittances but the impact was shortlived.

A former Chief Secretary of Punjab told Business Standard that it is more of failure of governance that could not restrain the expenditure jumping at a rapid pace at the cost of stagnant resources.

The former Finance Minister Manpreet Badal who is responsible for unfolding the high voltage political overtures blames the political turbulence in the state responsible for the financial turmoil.

“Government of India should have come to the aid of Punjab that became the victim of political acrimony of Pakistan. A decade long militancy completely offtracked the mobilisation of revenue,” he added.

The amount of debt on Punjab is gargantuan. But the insiders in the government said that the break-up given is incorrect. The state government owes Rs3,549 crore to the Centre. This is the only debt that can be waived off.

Punjab should have a VAT collection of Rs15,000 crore but had actual collection of Rs8,300 crore in 2009-10. The excise revenue of the state is Rs2,500 crore when it should be Rs5000 crore said a former finance Secretary of the state.