Case for special package: To reboot, Punjab needs governance revamp

  • Partap Singh Bajwa, Hindustan Times
  • Updated: Jun 12, 2015 23:48 IST

Undoubtedly, Punjab has been witnessing a persistent economic decline over the last two decades. The state is in a financial mess and its empty coffers say it all.

However, Punjab is still a prosperous state with better economic indicators than many other states as it had registered the highest growth rate for over three decades, from mid-sixties till mid-nineties.

Punjab’s case for a financial package, however, must rest on its current problems, rather than its past glory. The state’s economy has been growing at a rate below the national average for almost 15 years now. It has ceased to be the highest per capita income state and now ranks 9th in the country. It continuously remains in overdraft with the Reserve Bank of India and exceeds its ways & means advances for more than half a year. Its revenue deficit is at about Rs 7,000 crore and its fiscal deficit close to Rs 9,000 crore during the last financial year. It has accumulated a massive debt amounting to Rs 1.13 lakh crores, without accounting for state guaranteed loans of various public sector undertakings.

In hard times, govt is being extravagant

The state’s total revenue does not even suffice to meet its housekeeping expenditure, leaving virtually nothing for investment in future growth.

Sadly, such a grim fiscal situation has been accompanied by unparalleled extravagance, abuse and waste of public money in a discretionary and unaccountable manner. It’s exemplified by chief minister’s ‘sangat darshan’ programmes where public money is distributed for securing political ends, in a manner reminiscent of feudalism and throwing all canons of financial propriety to the winds.

Instead of taking measures to improve the fiscal situation, the Punjab government has been comparing its debt with that of the US, the richest country in the world, and has been claiming that the state’s fiscal situation is nothing to worry about.

Cong govt in Punjab passed the litmus test

The Congress government, when it came to power in 2002, also faced a similar financial position left behind by the previous SAD-BJP government. The then Congress government firmly resolved to set its house in order. Despite being a politically tough decision, it chose the path of fiscal rectitude. The state was also helped by the then central government, which not only granted revenue deficit grants to the tune of about Rs 6,000 crore, but also gave a loan of Rs 4,500 crores to square up the food credit account. The Union government also waived the outstanding special term loan of about Rs 4,000 crore pertaining to militancy days.

As a result, the Congress government left the state with a revenue surplus of about Rs 2,000 crore at the end of 2006-07. It is therefore wrong to argue that the current situation faced by the state is a result of discriminatory treatment by the central government.

Can’t be arrogant while demanding a package

Chief minister Parkash Singh Badal has made a claim for a special financial package to the state as a reward for it being the sword arm and grain bowl of the country. He has, therefore, argued that the state’s demand for such a package is not a concession but a matter of right. This not only sounds vainglorious, hubristic and arrogant, but is also an insult to the Punjabis who have always been at the forefront of every national cause.

This, however, does not take away the case for the need of a special financial package for Punjab to help it set its house in order and to mount a credible development effort. In fact, the 13th Finance Commission had very well recognised it and recommended that Punjab along with West Bengal and Kerala be helped through a comprehensive package to tide over their debt-stress.

SAD-BJP regime lost golden opportunity

Instead of drawing of any such package and seeking approval of the central government for it, the SAD-BJP government squabbled over the matter and threw away a golden opportunity. Their present demand for a package is nothing more than crying over spilled milk. However, having regard to its stalled economy and empty coffers, a good case in favour of a special financial package needs to be made out.

A package, by its very nature, cannot be a one-sided giveaway. It must be a blueprint for pulling the state out of its current financial difficulties and pushing it to a higher growth trajectory. To ensure proper utilisation of funds, proper monitoring and strong accountable mechanisms are needed. The state government must build a political consensus. The Punjab Congress would be glad to join such an endeavour.

Fighting 'mal-governance' is biggest challenge

At its core, the current economic and fiscal mess in the state is only symptomatic of mal-governance for a prolonged period of time. At its most egregious, it manifests in land mafia, sand mafia, liquor & drug mafia, transport mafia and cable TV mafia. It is also evident from the scale of wastage of public money for private gain, with an inbuilt conflict of interest between good governance and the power elites.

Two glaring and recent examples are the Moga Orbit bus incident and the construction of a nearly Rs 30 crore special road at the cost of public exchequer to provide connectivity to a private 7-star resort.

This reminds me of an ancient popular saying, “Jis desh ka raja beopari, us desh ki prajah bhikari” (In a nation ruled by merchants, people are destined to be paupers).

To conclude, without vast improvements in governance, in all its facets, a special financial package, howsoever attractive, will not make any dent in the socio-economic problems of the state. This calls for restoring the rule of law in the state and effectively checking the excesses of the rulers.

Partap Singh Bajwa

(The writer is Punjab Congress chief)

Tomorrow: Dr SS Johl, eminent economist and chancellor, Central University, Bathinda

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