Congress regime spent recklessly, left behind ₹24,351 crore unpaid liability: Mann govt’s white paper
Two days ahead of its first budget, the Aam Aadmi Party (AAP) government in Punjab, while painting a grim picture of the state finances, on Saturday tore into the previous Congress government for “reckless spending” and saddling it with “unpaid liability” of ₹24,351 crore besides a colossal debt.
In a white paper tabled by finance minister Harpal Singh Cheema in the Punjab Vidhan Sabha, it said that the immediate and medium-term pending liabilities left by the previous government, just like their predecessors, while demitting office is on account of pay commission arrears, power subsidy arrears, atta-dal scheme and crop loan waiver.
Out of the total ₹24,351 crore, ₹13,759 crore, or say 57%, is the pending liability of sixth pay commission, which, though one of the big promises of the then Congress government, was implemented in July 2021 with quite a delay and in haste with only six months to go for the state elections, the document said, questioning the manner in which the implementation was handled.
Another ₹7,117.86 crore is unpaid power subsidy claimed by Punjab State Power Corporation Limited (PSPCL) for supply to agriculture, domestic and industry consumers last year. Additionally, ₹2,274 crore for atta-dal scheme and ₹1,200 crore for crop loan waiver have also not been paid. The new government has to discharge these (liabilities) in the coming years, it said.
The 73-page document, as per which the state finances are in a “free fall”, has been brought out at a time when all eyes are on the state budget and the course the AAP government takes to fulfill its two major poll promises – free electricity for all domestic consumers from July 1 and ₹1,000 per month to every woman, despite severe fiscal constraints. If implemented as per the announcement made during the poll campaign, the two promises are estimated to entail an additional burden of more than ₹15,000 crore annually on the exchequer. The state cabinet had, on Friday, announced to table the white paper to apprise the people of the fiscal problems it has inherited.
Reckless spending in tough times
Censuring the previous Congress government for its fiscal management practices, the white paper said that in an attempt to salvage its political fortunes, the previous government resorted to reckless spending during the end of its tenure. “Change at the helm of affairs of the state in previous regime came at a huge cost to state exchequer, courtesy various one-time measures and other decisions that has impacted the future resources of the state,” it said on the change of guard effected by the Congress in September 2021.
The document said that since September 20, 2021, a total of ₹9,047 crore worth of schemes, one-time settlements and waivers were announced by the government in a desperate attempt to consolidate the voters in the state and has put enormous burden on the already fiscally strained state treasury. “The schemes/waivers so announced not only resulted in decreased revenue receipts and increased revenue expenditure on a one-time basis but it would also impact receipts/expenditure on a recurring basis,” it said, listing reduction in power and water charges, cut in petrol and diesel prices and VAT settlements.
According to the document, the discretionary grants of ministers, which were ₹50 crore and ₹5 crore for the chief minister and cabinet ministers for 2021-22, saw release of additional funds to the tune of ₹150 crore for the CM and ₹17.50 crore for seven new cabinet ministers. “This reckless spending in these tough financial times when the state is recovering from the after-effects of Covid-19 speaks volumes on the expenditure priorities and fiscal management capabilities of the outgoing government,” it stated.
Impact of cessation of GST compensation
On the end of the goods and services tax (GST) compensation regime on June 30, the state government said that it would be staring down a big hole left in its finances to the tune of ₹15,000 crore in the 2002-23 financial year itself and ₹21,000 crore per annum thereafter.
“This is a fall off the cliff scenario for the state,” it said, pointing out that there were no attempts or incentive to increase the revenue of the state by the previous government. “The lack of planning and efforts to consolidate the revenue in preparation for end of GST compensation regime has put the state in a compromising situation.”
Caught in ‘a classical debt trap’
Detailing its fiscal concerns, the state government said the current debt indicators of Punjab are probably the worst in the country, pushing it deeper into a debt trap. “The state is in a classical debt trap as a significant portion of the annual gross debt/borrowings contracted by the government is being applied towards repayment of the old debt and interest payments and not for the future development and prosperity of the state,” the white paper stated, putting the outstanding liabilities at ₹2.63 lakh crore as on March 31 as per revised estimates with debt-GSDP ratio of 45.88%.
Roadmap for revival suggested
Calling the last 10 years as the “lost decade”, the document, while outlining the roadmap for future, said the state has to cautiously take debt and invest heavily in high-quality capital expenditure creation and revenue enhancement measures. “Debt consolidation is possible only with rapid growth, high quality capital expenditure and resource mobilisation,” it stated. Blaming political priorities of successive governments that overlooked financial logic for the economic morass, it said that a serious look into expenditure commitments coupled with direct revenue enhancement measures needs to be done.
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