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Fiscal woes: joint action plan needed

chandigarh Updated: Sep 01, 2012 12:32 IST
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Ancient legend has it that when King Xerxes of Persia planned an attack on the state of Greece, he ordered that a bridge be built over the Hellespont sea. But when the rough sea waters prevented his engineers from making the bridge successfully, Xerxes was so upset that he decided to "punish" the sea by ordering that the waters be lashed by whips 300 times and that fetters be thrown to hold the sea captive!

The Punjab government levying new taxes is akin to Xerxes whipping the sea. If the king failed to recognise that the problem did not lie with the sea but with the bad quality of engineering, then our leaders fail to understand that Punjab's fiscal woes are due to the abysmal quality of our politicians and politics, which we have seen in the past many years.

I don't believe the projected increase in earnings the government has shown from this tax tinkering, but if these were to be true, these collections would be a pittance when juxtaposed with the monstrosity of Punjab's debt. The deficit figures mentioned by our young finance minister in his maiden budget were alarming enough, but these did not include off-budget, contingent and deferred liabilities.

Once all this is taken into account, the total debt comes to around Rs 1.25 lakh crore! How is this so-called piecemeal revenue mobilisation going to help? At best, this is just a temporary measure that will allow the government to meet its own unconscionably high expenditure and save itself from the mortification of not being able to pay salaries to its employees.

To pay back what it owes to its own people, the government is taxing them. While the common man has been burdened, the elite of the government continue to live profligate lifestyles.

To give an example, during my tenure as finance minister, we received a letter from a top Vidhan Sabha functionary, who wanted to attend (along with his wife) a Commonwealth conference in Malaysia en route the US, Canada and Australia, with all the expenditure billed to the exchequer.

On being declined, he threatened the finance department with breach of Vidhan Sabha's decorum! Eventually, the chief minister approved the trip.

In a sickening sense of déjà vu, this year, a person occupying the same office asked for a super-expensive sedan, as he experienced "joint pains" in the car provided to him by the government. The annals of Punjab government, especially in the past decade, are replete with examples where public money has been blatantly used to refurbish one's own house, meet myriad expenditures of one's family members, fund fancy foreign trips and enjoy other "luxuries".

The quality and thinking of the leadership in Punjab remains essentially feudal. Till the time this changes, Punjab's economic as well as social fabric would continue to be shredded to pieces. And let us not give bogus arguments to save oneself embarrassment.

Take for example the government's plea that levy of property tax would allow it to get funds from the Centre. The only funding that this will fetch will come through the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a scheme which Punjab refused to take advantage of for nearly a decade.

You can raise a thousand taxes and burden the common man, but it won't make any difference till the time you have bogus boards such as of cow protection and youth development, and some dozen other plum government-funded sinecures. When the common man sees that all licences in transport, mining and other such resources are given to members of ruling families at one-tenth of their actual costs, thereby causing loss of thousands of crores of rupees to the government coffers, he is pained at the dishonesty of the leaders he elected.

Can something be done? Yes, but first there has to be an acknowledgement across parties that Punjab's financial condition is precarious and unless we do something urgent about it, we are doomed to disaster. All political parties need to come together for a consensual joint plan of action that is above all forms of political expediency and is aimed solely at saving Punjab. But this consensus can be achieved only if our leading politicians can overcome their biases, tendency of oneupmanship and myopic vision which bars them for seeing beyond their immediate benefits.

In view of the sheer weight of unfavourable numbers, with close to Rs 40,000 crore going to salaries, pension, interest and repayments, the situation is beyond any fiscal measure. The ideal political solution that I envisage involves Punjab's parties coming together and unequivocally pledging to remove all distortions, anomalies and wastefulness from our system. Once they do that, the Centre would be far more appreciative of our demand of Rs 20,000 crore. Unfortunately, right now, the Centre is averse to helping Punjab as it views us as a decadent child who will blow up this money as well.

Critics may say that to expect such an agreement in our fractious polity is being idealistic. I say that pragmatism has brought us to such terrible lows, how about giving idealism a chance now?

The writer, a former Punjab finance minister, is the president of People's Party of Punjab.