Punjab mulls Plan B to raise Rs 10,000 crore
Though FM Manpreet Badal refuses to divulge what the options are, imposition of any new tax may not be one of thempunjab Updated: Aug 22, 2017 10:39 IST
The Congress government in Punjab has completed six months, but the promise to write off farm loans remains on paper despite much talk. Farmer unions have, meanwhile, upped the ante and last week laid siege to local bodies minister Navjot Singh Sidhu’s house in Amritsar.
Amid this simmering unrest, the government led by Capt Amarinder Singh is hoping that the central government bails it out. The chief minister has already met Prime Minister Narendra Modi and Union finance minister Arun Jaitley on August 8 for relaxation in the borrowing limit under the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, so that the state is able to raise a Rs 10,000-crore loan to provide relief to at least the 10.25 lakh marginal and small farmers.
“We will do all that we can to honour our promise. Even the Centre may announce a waiver for farmers close to the 2019 general elections.”
But the Centre has so far refused to oblige. Because, not only can setting such a precedent lead to clamour among other states for similar concessions, but it will also ruffle the feathers of the Shiromani Akali Dal (SAD), the BJP’s ally in the state and at the Centre. The SAD-BJP combine in the state has made the absence of debt waiver so far as its prime ammunition against the Congress government. It must be recalled that Amarinder had often mocked his predecessor, SAD patriarch Parkash Singh Badal over his going to the then PM Manmohan Singh with “bouquets and a begging bowl”.
Though state finance minister Manpreet Badal contends the Centre is “sympathetic” towards Punjab’s demand, he claims the government also has a “Plan B” to raise the money. He refuses to divulge the other options, but imposing fresh taxes may not be one of them after rollout of the Goods and Services (GST) Act. Anyway, the government cannot afford to antagonise urban voters before the municipal elections expected late this year.
“We will do all that we can to honour our promise,” Manpreet says, adding, “Even the Centre may announce a waiver for farmers close to the 2019 general elections.”
Manpreet says the Rs 10,000-crore loan will add another Rs 800 crore annually on account of interest payments. According to the white paper and budget presented by the government in June, interest payments for 2016-17 will amount to Rs 10,098 crore, which is likely to increase by more than 30% in 2017-18 “on account of concealed liabilities”.
It is these “concealed liabilities” that Manpreet blames for not knowing the real extent of Punjab’s debt before the party made the waiver promise. “We knew that the state was under a huge debt. But we were not aware that Rs 31,000 discrepancy in cash credit limit (CCL) too has been converted into a loan a day before counting of votes. And that another Rs 16,000 crore have been raised through UDAY bonds for settling dues of the state power corporation. The previous government also left us pending bills of Rs 13,000 crore. In less than two weeks of taking over, the Reserve Bank of India (RBI) stopped payments to the Punjab government for defaulting on overdraft,” Manpreet says.
But the Congress manifesto, drafted by him, had highlighted the cash crunch. “Punjab has been living under state of fiscal emergency. It does not even have money to pay for salaries and pensions. The party promises to restore state’s fiscal honour and end its indebtedness,” it read. Yet it promised voters the moon. The contradictions have now come to haunt the Congress despite winning elections with a thumping majority.
SYL hanging fire too: Hearing on Sept 7, no talks yet
The Congress government is racing against time to honour not only its debt waiver promise to farmers but also defer implementation of the Supreme Court’s order on construction of the contentious Sutlej-Yamuna Link (SYL) canal. On July 12, the SC was told by Punjab’s lawyer AK Ganguly during a hearing that Prime Minister Narendra Modi will meet chief ministers of Punjab and Haryana to iron our differences.
Attorney general KK Venugopal had then said he was not told about such a meeting. “I was not informed by the water resources secretary about any such meeting; but if it is happening, it is good.”
The Punjab CM had welcomed the Centre’s intervention to initiate talks with Haryana. The court gave two more months to enable the Centre to negotiate with the states while fixing September 7 as the next date of hearing. But the talks have yet to take place.
First Published: Aug 22, 2017 09:23 IST