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Amid debt row, Punjab cuts back its borrowings in third quarter
It has projected a market borrowing of ₹7,500 crore in the October-December period. Of this amount, ₹3,500 crore will be raised in October, ₹2,500 crore in November, and ₹1,500 crore in December, according to the indicative borrowing calendar shared by the state government with the Reserve Bank of India
Amid the ongoing blame game over rising debt, the Punjab government is likely to tamp down its market borrowings in the third quarter of financial year 2023-24.
It has projected a market borrowing of ₹7,500 crore in the October-December period. Of this amount, ₹3,500 crore will be raised in October, ₹2,500 crore in November, and ₹1,500 crore in December, according to the indicative borrowing calendar shared by the state government with the Reserve Bank of India (RBI). The funds will be raised through the sale of government securities, mostly having a tenure of 20 years, through auction.
The tentative quantum of market borrowing planned by the state government in the October-December quarter is lower than the first two quarters of the current fiscal. In the first six months, it had projected market borrowing of ₹27,300 crore – ₹14,100 crore in the April-June quarter and ₹13,200 in the July-September period and was on a borrowing spree. The funds raised through the central bank’s banking solution (E-Kuber) were more or less as per the borrowing calendar, people aware of the state government’s market borrowings said.
The state’s move to cut back its market borrowings in the third quarter has come amid the slugfest between the ruling Aam Aadmi Party (AAP) and the opposition parties over the state debt, with both sides blaming each other. The blame game was triggered by Punjab governor Banwarilal Purohit’s letter to chief minister Bhagwant Mann in September, seeking details of the ₹50,000 crore debt raised by the AAP government during the past one-and-a-half years and its utilisation. The opposition leaders had accused the state government of a “lack of transparency and accountability” in the utilisation of funds.
Mann replied to the governor on October 3, informing him that his government has added ₹47,107.6 crore to the state debt from April 1, 2022, to August 31, 2023, through market borrowings and other loans, and 57% of it went into meeting the interest liability on the debt it inherited. He also blamed the previous for the debt left behind by them.
A government functionary said the market borrowing plan for the current quarter had nothing to do with the opposition onslaught. “The expenditure on development works was frontloaded in the initial months to give a push and power subsidy, which is higher during the summer period, also got released in time. We are in a better financial position right now,” said the functionary, who did not want to be named. The release of pending goods and services tax compensation of ₹3,671 crore by the Centre for July 2017 to March 2022 has come as a respite. Finance and taxation minister Harpal Singh Cheema, whose department had worked assiduously, has already expressed gratitude to Union finance minister Nirmala Sitharaman for releasing the compensation. Punjab has been raising money through market borrowings to fund its fiscal deficit – excess of the government’s spending over its revenue, in simple words.
