Punjab in debt trap, AAP govt inherited liability of 24,351.29 crore: White paper

Published on Jun 25, 2022 12:42 PM IST
Document presented by finance minister Harpal Singh Cheema blames previous government “who let Punjab slip into fiscal profligacy with unchecked increase in unproductive revenue expenditure, freebies and unmerited subsidies”
Chief minister Bhagwant Mann addressing the Punjab assembly on the second day of the budget session on Saturday. State finance minister Harpal Singh Cheema is seen seated beside him. (Ravi Kumar/HT)
Chief minister Bhagwant Mann addressing the Punjab assembly on the second day of the budget session on Saturday. State finance minister Harpal Singh Cheema is seen seated beside him. (Ravi Kumar/HT)

Two days ahead of presenting his first budget, finance minister Harpal Singh Cheema on Saturday presented a white paper on the state of finances, saying that Punjab is in an economic morass and debt trap.

Also read: Punjab Budget 2022-23: 5 key challenges facing FM Harpal Cheema

“The current date indicators of the state are probably the worst in the country, pushing it deeper into a debt trap,” Cheema said.

According to the document, the previous governments, instead of taking necessary corrective measures, continued to let Punjab slip into fiscal profligacy, as is evident from unchecked increase in unproductive revenue expenditure, freebies and unmerited subsidies, leading to a virtual collapse. It says social sector investments are vital for future growth and non-realisation of its potential of tax and non-tax revenues.

Blaming the previous government, the white paper said the Congress government professed bringing fiscal prudency in management of state finances, while discreetly choosing not to discharge the pending liabilities. “Sadly, they also followed their predecessors and while demitting office, handed over immediate and medium-term staggering liability of 24,351.29 crore that the new government has to discharge over the coming years, including claims by agencies such as Punjab State Power Corporation Limited (PSPCL),” it read.

According to the white paper, the 6th Punjab Pay Commission, which was otherwise due from January 1, 2016, was implemented in July 2021 with quite a delay and in haste with just six months before the assembly elections. “The nature and the way the 6th Punjab Pay Commission was implemented led to a sense of resentment, uncertainty, anguish and disappointment amongst the employees,” it said.

It said the previous government could not pay the arrears of revised pay with effect from January 1, 2016, to June 30, 2021, on account of implementation of the 6th Punjab Pay Commission and the pending liability on this account alone is expected to be around 13,759 crore.

Additionally, the amount of arrears of power subsidy and interest thereon that has been indicated by PSPCL to be payable to it for agriculture, domestic and industry is 7,117.86 crore.

On the end of the goods and services tax (GST) compensation regime on June 30, the Aam Aadmi Party government, in its white paper, said that it would be staring down a big hole left in its finances to the tune of 14,000 to 15,000 crore in the 2002-23 financial year itself. “This is a fall off the cliff scenario for the state,” it said.


    A senior assistant editor, Navneet Sharma leads the Punjab bureau for Hindustan Times. He writes on politics, public affairs, civil services and the energy sector.

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