Punjab chief minister Parkash Singh Badal on Saturday requested Finance Commission to recommend more than Rs 50,000 crore as grants to the border state to help it overcome "financial challenges" that will bring it under Rs-1-lakh-crore outstanding debt by the end of this fiscal.
The 14th Finance Commission led by chairman YV Reddy arrived here on Friday on a two-day visit, and held a series of meetings with the state government and key stakeholders to review Punjab's finances and demands. The commission will finalise its recommendations by October after completing the discussions with all state governments and the union government.
In his presentation after submitting memorandum to the commission, the CM sought Rs 9,639 crore state-specific grants, Rs 8,775 crore for the agricultural diversification plan, and a debt relief of Rs 24,813 crore for the country's "sword arm" and "granary".
Requesting the commission to fix the states' share in central taxes at 50%, Badal sought Rs 3,000 crore for promoting industry and Rs 500 crore for building and strengthening infrastructure in the border areas.
He also demanded that the union government should bear 50% of the Rs-6,000-crore annual subsidy bill of free electricity to the agriculture sector. "To bail out farmers and save agriculture, the state government is investing almost Rs 6,000 crore a year to provide the agriculture sector with (free) electricity," Badal said.
"Terming the initiative as a step towards national food security, he (Badal) urged the Centre to share at least half the burden of this investment," a government spokesperson said, quoting the CM. Badal blamed the "long years of militancy" and "long spells of President's rule" for pushing revenue-surplus Punjab into debt trap.
Arguing that Punjab had fought the country's wars, Badal sought the restructuring of the balance outstanding debt and a moratorium on the payment of interest, considering the state's strong financial position prior to militancy.
Flanked by cabinet colleagues and a battery of senior state bureaucrats, the CM informed the commission that the Centre had referred to it the issue of the debt-stressed states of Kerala, Punjab and West Bengal. He demanded Rs 24,813 crore as debt relief grant towards outstanding small savings and the Government of India (GoI) loans.
He referred to the order by which the-then prime minister, IK Gujral, had waived the entire special term loan raised during the militancy in Punjab. "However, when it came to implementation, only the outstanding balance on that date was waived," said Badal. He asked for a special term loan and said the interest paid already by the state had amounted to Rs 2,694 crore at current prices.
Referring to the industrial tax concessions which the Centre had given to neighboring states, Badal said the "discriminatory policy" had resulted in the stopping of fresh investment and the flight of capital from the state. He asked the Centre for tax concessions to Punjab on a par with those granted to the neighbouring states.
Earlier, finance minister Parminder Singh Dhindsa said in his speech said that the state government was conscious of the need to contain revenue deficit and had made significant effort to increase own tax revenue and compress non-plan revenue expenditure.
The commission chairman assured the CM that his team would examine all the aspects of fiscal consolidation thoroughly.