Finance Minister Harpal Singh Cheema on Saturday issued a white paper on the condition of finances, warning that Punjab is in an economic mess and debt trap two days before delivering his maiden budget.
The state’s present indicators are perhaps the worst in the nation, furthering its debt trap, according to Cheema.
The document claims that previous administrations allowed Punjab to continue to slide into fiscal profligacy instead of taking the necessary corrective measures, as is evident from the unchecked growth in unproductive revenue expenditure, freebies, and unmerited subsidies, which eventually led to a virtual collapse. It claims that investments in the social sector are essential for future development and the underutilization of its tax and non-tax income potential.
The white paper placed the blame on the previous administration and claimed that although the Congress government claimed to have brought fiscal responsibility to the management of state finances, it secretly decided not to pay off the outstanding debts. The statement read, “Unfortunately, they also followed their predecessors and, while vacating office, handed over an 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 like Punjab State Power Corporation Limited (PSPCL).”
The white paper claims that the 6th Punjab Pay Commission, which would have gone into effect on January 1, 2016, was rushed and implemented in July 2021, only six months before the assembly elections. It stated that the employees felt animosity, uncertainty, agony, and disappointment as a result of the kind and manner in which the 6th Punjab Pay Commission was implemented.
It stated that due to the implementation of the 6th Punjab Pay Commission, the previous administration was unable to pay the arrears of revised pay with effect from January 1, 2016, to June 30, 2021, and the outstanding liabilities on this account alone is anticipated to be over 13,759 crore.
Additionally, PSPCL has stated that it must pay it 7,117.86 crore in power subsidy arrears and interest on those arrears for household, industrial, and agricultural use.
The Aam Aadmi Party administration stated in its white paper that it would be facing a significant hole in its finances to the tune of $14,000 to $15,000 crore in the 2002-23 fiscal year itself due to the termination of the goods and services tax (GST) compensation scheme on June 30. The statement read, “This is a fall over the cliff situation for the state.”