Just five months back the fiscal crisis had hit the Punjab government hard so much so that Punjab Urban Planning and development Authority (PUDA) had come to the rescue of the cash-strapped Badal government by borrowing Rs. 1,000 crore from the banks to help it pay salaries to its employees and to meet its day-today fiscal obligations.
Now, the government had again directed the PUDA to raise Rs. 1000 crores so as to meet its financial liabilities.
The fiscal health of the state is in such a mess that it failed to timely pay back Rs. 1000 crores loan as per banks’ repayment schedule. “Though a bill of Rs. 16.67 crores towards bank loan installment had been sent to the treasury, but the funds were not released. Any delay in payment to banks may attract penal interest,” an official note circulated last month had revealed. Sources said the finance department later got the loan installment released fearing adverse affect on its financial creditability in the financial market.
This had happened despite the state government agreeing to adhere to repayment schedule and made a provision of Rs. 100 crores grant in the annual plan 2013-14.
The PUDA also faced piquant situation on account of receiving funds for loan repayment from the government as grant-in-aid. “The release of funds repayment as grant may result in income tax liability at some stage. Finance department shall suitably amend the purpose of release of funds to PUDA as repayment of loan,” the PUDA authorities demanded during a recent meeting presided over by the principal secretary (finance) DP Reddy.
On PUDA officials insistence, the finance department agreed to issue instructions to the treasury that in future whenever the bill of directorate of housing and urban development or PUDA for release of funds is presented as per the ‘repayment schedule’ including for that of Rs. 1000 crores now to be raised, the same may immediately be cleared.
Seemingly worried over past experience of not getting funds released in time, the PUDA authorities also made finance department agree to issue commitment that the government would stand guarantee for the fresh loan of Rs. 1000 crores and the funds for repayment of this to the banks would be released by the government as per repayment schedule.
Meanwhile, the PUDA would mortgage its properties, earlier transferred to it by the state government under optimum utilization of vacant government land (OUVGL) scheme, to Canara bank for raising Rs. 500 crores loan at an interest base rate of 9.95%. Similarly, Bank of India would lend Rs. 500 crores at a base rate of 10%.
The finance department had directed the PUDA to deposit Rs. 500 crores with the government in current month and Rs. 500 crores in September after obtaining loan of Rs. 1000 crores.