- Govt spin doctors flummoxed
- Total debt on State Rs 1.81 lakh crore
- Revenue shortfall is expected to be Rs 21,568 crore in 2017-18
- Pending liability of Aata-Dal scheme is Rs 1,747 crore
Even as PunjabÔÇÖs Finance Department is mulling over bringing out a White Paper on the State finances, the top mandarins in the Capt Amarinder government are finding it difficult to suggest a roadmap for the State to come out of the financial quagmire.
A status note on financial position which will form the State governmentÔÇÖs proposed White Paper, a copy of which is with Daily World, shows that the bills of Rs 2,080 crore presented to various treasuries in Punjab were not cleared as on March 31, 2016.
During the current year 2016-17 as on February 28, 2017, the State remained in overdraft for 157 days and in addition, it remained under Ways and Means (WMA) for 170 days.
The note has revealed that due to precarious fiscal health, the State government is yet to release Rs 1,908 crore on account of various grants and loans received on account of Central assistance for various Central schemes, NABARD loans, external aided projects, welfare schemes and flagship programmes.
The status note further says that the total pending liability of the Atta-Dal scheme launched by the Akali regime stands at Rs 1,747 crore. To implement this scheme, no financial assistance was provided by the Punjab government.
In fact, funds were arranged by procurement agencies (PUNSUP, Markfed, Punjab Warehousing Corporation and the PAFC at their own level by diverting funds from limits provided for procurement of wheat and paddy for Central pool and recouped by raising short term loans (STL) from various banks.
ÔÇ£No reimbursement was made by Punjab government to the State agencies for subsidy/expenditure made by various agencies involved in the scheme,ÔÇØ the note added.
As on February 28, 2017, the upaid liabilities of the State government stood at Rs 6,528 crore that included Dearness Allowance (DA) of Rs 2,873 crore, Atta-Dal scheme of Rs 1,747 and grants and loans received from the Central government of Rs 1,908 crore. While the revenue deficit of the State was Rs 8,550 crore in 2015-16, according to 2016-17 budget estimates, the revenue deficit is expected to be at Rs 7,983 crore, which is 1.16 per cent of the GSDP of the State. Similarly, the fiscal deficit is expected to be Rs 13,087 crore in 2016-17, compared to Rs 11,762 crore in 2015-16.
The outstanding debt of Punjab as on March 31, 2016 was Rs 1,22,586 crore which is 29.98 per cent of the Gross State Domestic Product (GSDP) of the State. The estimated figure according to Budget 2016-17 as on March 31, 2017 is at Rs 1,31,470 which is 28.93 per cent of GSDP. The note says that the huge outstanding debt of the State pre-empts significant resources of the State for debt servicing. The total debt servicing expenditure in 2014-15 was Rs 12,174 crore (principal Rs 3,214 crore and interest payment Rs 8,960 crore). The government has also borrowed Rs 3,625 crore from various agencies such as PUDA (Rs 2,000 crore), PIDB (Rs 1,125 crore), PunGrain Rs 250 crore and Housing (Rs 250 crore).
According to the status note, the total combined debt of the State government is around Rs 1,81,727 crore.
The status note says that the total committed expenditure of the State during 2015-16 stood at Rs 46,842 crore which was 112 per cent of the total revenue receipts of Rs 41,523 crore of the State.
The note finally says that total expected expenditure in the coming financial year (2017-18) is expected to be Rs 75,168 crore as compared to the expected receipts of Rs 60,128 crore. Thus, the percentage total shortfall to expected revenue is likely to be Rs 21,568 crore which is a whopping 49.07 per cent.
The challenge before the top political brass is now to suggest innovative measures to tide over this fiscal crisis. It is understood that the Modi government is highly unlikely to announce a special package for Punjab since the perception in Delhi is that the entire problem is self-created. Moreover, with the GST regime coming in force, PunjabÔÇÖs capacity to tweak with tax rates will drastically get limited.
The CongressÔÇÖ 2017 manifesto includes waiver of farm loans. But with hardly much option for the State government to manoeuvre to augment revenue, the present government is expected to be choked, especially when the pressure is expected to mount on it following the loan waiver by the UP government.
Growth rate of tax revenue on decline
The growth rate of the StateÔÇÖs own tax revenue has been showing a declining trend from the year 2012-13 onward. For the year 2016-17, the growth rate is expected to have a shortfall, as the growth rate of 14.45 depicted is unlikely to be achieved in the current financial year taking into account the past trends, the note said.
According to the figures, the State collected Own Tax Revenue of Rs 26,690 crore and Non-Tax Revenue of Rs 2,650 crore during the year 2015-16. The target of tax revenue for the year 2016-17 is at Rs 30547 crore and non-tax revenue is at Rs 3,807 crore.
Punjab using 90 per cent borrowings to meet revenue deficit
About 85-90 per cent of the fiscal deficit or its net borrowings during the year are utilised to meet revenue deficit of the State. Only 10-15 per cent of the net borrowings are utilised to finance Capital Expenditure of the State. In the ideal situation, the entire net borrowings or fiscal deficit of the State should be utilised for meeting capital expenditure of the State. It may be mentioned that the State has given undertaking to limit its fiscal deficit to 3 per cent of the GSDP as required under the Financial Responsibility and Budget Management Act, 2003.