Painting a grim picture of the state’s finances, the newly elected Aam Aadmi Party government on Saturday unveiled a white paper which claimed that the finances were in free fall and with the GST compensation regime ending this month, it would “Will fall off a cliff”.
The white paper was presented just two days before the presentation of the first budget of the Bhagwant Mann government. The white paper claimed that the state is trapped in a debt trap, where more debt is being deposited to repay the old debt and not for the future development of the state.
The state will face a revenue shortfall of Rs 15,000 crore this year at the end of the GST compensation regime, and Rs 21,000 crore per year thereafter. The document said the state’s debt grew by 44.23 per cent during the Congress’s five-year rule, a compound annual growth rate of 7.60%.
The AAP government finds itself in a difficult position as the party has made lofty promises ahead of the elections and will require substantial budget outlay. But the state of finance may not give enough financial space to the government to fulfill all its promises.
According to the white paper, the previous Congress government has left an immediate and medium term liability of Rs 24,351.29 crore, which the AAP government will now have to discharge. The document states that the debt indicators of the state are among the worst in the country.
Congress had come out with a similar white paper when it came to power in 2017. He then accused the previous Akali Dal-BJP government of financial mismanagement. The then Congress government claimed that they were troubled by the legacy food loan loans and loans taken by the Punjab State Power Corporation Limited under the UDAY scheme.
The white paper also shows how the previous government had announced the implementation of the Sixth Punjab Pay Commission in July last year but did not clear the arrears of revised pay of Rs 13,759 crore. The unpaid power subsidy was Rs 7,117.86 crore, it says.
“The previous government resorted to reckless spending in the last days of its tenure to revive its political fortunes,” it said.
The outstanding dues also stand at Rs 43,204.59 crore on state undertakings, boards and corporations, as they have raised loans of Rs 54948.75 crore, the document said. The total dues of the state is Rs 2.85 lakh crore. The white paper states that the return on investment of Rs 23,853.71 crore by the state government in these 46 entities is only 0.016 per cent.
It also said that the “lost decade” (five years of Congress and last five years of Akali-BJP rule from 2012-17) needs to be made up. “The state will have to borrow carefully and invest heavily in high quality capital expenditure generation and revenue augmentation measures. This value will create a cycle of acceleration,” it says.
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