Punjab government has halted payment of over Rs 2,000 crore in bills, following its overdraft shooting by Rs 40 crore everyday, it is learnt.
The already precarious fiscal health of the state has taken such a turn in the past week that to meet day-to-day expenses, the government has been overdrawing from the Reserve Bank of India (RBI) as it has exhausted all other sources of receipts, government sources said.
Overdraft means the government has exhausted all borrowing limits and in such a situation, temporarily draws from the RBI. A top official said, “The overdraft was Rs 924 crore on Wednesday last and it is increasing by Rs 30 crore to Rs 40 crore everyday.”
The outstanding bill payment, which has been stopped, ranges from plan expenditure — central schemes included — to bills of employees and departments.
What now worries the government is the salary bill of Rs 1,300 crore, due on October 1.
“As a precaution, we have stopped payment of Rs 2,000-crore bills pending as of Tuesday. In the month end, the overdraft is not a healthy sign,” said a senior government officer.
Now the government has set its eyes on the Rs 1,000-crore value added tax (VAT) it is likely to get at the month end, Rs 500-crore instalment from the union government and about Rs 700 crore it will borrow next month for salaries and pensions.
While the per-month salary/pension bill is of Rs 1,300 crore, it went to Rs 1,800 crore in August when the government released the arrears. Sources say the government is left with the open-ended revenue from excise and VAT, which is used for the committed liabilities — salary and pension. Revenue from the VAT — over Rs 1,000 crore per month — goes to meet the salary/pension bill.