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Extravagant Badal govt reels under all-time high subsidy bill, seeks bailout from Modi

Robbing Peter to pay Paul. The populism of the Parkash Singh Badal government is running on, making its own agencies and corporations pay for its profligacy.

chandigarh Updated: Jul 15, 2014 08:08 IST
Sukhdeep Kaur
Sukhdeep Kaur
Hindustan Times

Robbing Peter to pay Paul. The populism of the Parkash Singh Badal government is running on, making its own agencies and corporations pay for its profligacy.

Ironically, while Punjab chief minister Parkash Singh Badal was quick to call on union finance minister Arun Jaitley to seek a package to bail out the state from financial distress, the Punjab budget to be presented by state finance minister Parminder Singh Dhindsa on July 16 is all set to foot a much higher subsidy bill.

A staggering Rs 6,300 crore will go for free power to farmers and BPL (below poverty line) families, up from Rs 5,785 crore in the last budget . This when the union budget presented by jaitley took the path of pruning subsidies and the state BJP too is not amused by rural-votebank-centric sops of the Shiromani Akali Dal (SAD).

Free power will continue to go to rich, big farmers and so would more tubewell connections, even as the government has failed to compensate fully the farmer-suicide-hit families of the last decade. And it is the beleaguered Punjab State Power Corporation Limited (PSPCL) that’s bearing the brunt, as the subsidy is never paid in advance.


The Badal regime will allocate a higher Rs 400 crore for the new atta-dal scheme, which from this year will cover nearly half the state’s population (31.4lakh families), giving them all cheaper wheat for Rs 1 per kilogram and pulses for Rs 20 a kg. While the earlier budgets earmarked Rs 300 crore and (since 2012) Rs 350 crore, it was only in the last budget that the sanctioned amount was released to the Punjab food and civil supply department from the state treasury. The Punjab government now owes to the four state procurement agencies (Punsup, Punjab Agro, Markfed and Pungrain) more than Rs 1,800 crore.

Even for the Shagun scheme, which was for the welfare of the Scheduled Castes and Backward Classes initially, the state will have to park more than last year’s ? 150 crore, since the benefits have been extended to more sections.

Besides, last year Rs 540 crore was earmarked for other subsidies and welfare doles. What this budget may not reveal is how the jump in the number of “trueblue” poor will burn a bigger hole in the state’s pocket, since sops such as free healthcare, school uniform, Nanhi Chhaan scholarships are now extended to all blue-card holders.


Together, these sops will overtake the government’s allocation for key sectors such as health and education and capital expenditure. Describing subsidies as a political commitment, state finance minister Dhindsa said: “It is difficult for the state government to run away from or roll back the subsidies. But we are exploring ways to cut down the bill by giving farmers incentives to save power.”

On huge outstanding dues of the atta-dal scheme, he contends that these should have been paid from the same year’s budget. “As finance minister, I had factored in the scheme’s subsidy bill last year too and ? 350 crore was released to the food department. This year, we will release ? 400 crore, which the department says it will need to run the scheme. I have inherited the liability of pending dues and we will have to see how to clear them,” Dhindsa added.


While the Badal regime is banking on the NDA (National Democratic Alliance) government at the Centre for a bailout, the biggest saving on the scheme has come from UPA’s (United Progressive Alliance’s) National Food Security Act. Almost the entire 9-lakh-tonnes of wheat needed to be given to 31-lakh beneficiary families will come from the Centre.

“The wheat quantity will come under the FSA. But we will incur the cost of further subsidising it to Rs 1 per kg, which will work out to be Rs 90 crore annually. Another Rs 211 crore will be incurred on procuring pulses. The remaining Rs 100 crore will be needed for meeting other expenses such as packing wheat in 30-kg bags, transportation, distribution and the payment of commission to depot holders,” says Punjab food and civil supply secretary DS Grewal.

Unable to pay depot holders, the department is taking over the transportation and distribution of the foodgrains and entrusting the same to own inspectors. Now the depot holders will just maintain records and be paid a commission for it. The state is waiting for the Centre to share more burden of the scheme. “We have sought that the Centre shared the cost of transportation and paying commission to the depot holders. A committee has been formed to resolve these issues but no decision has been reached as yet,” says Grewal.


First Published: Jul 15, 2014 08:03 IST