CHANDIGARH – The last five years of the SAD-BJP government saw public debt increase by almost Rs10,000 crore every year. This was the time when then Deputy Chief Minister Sukhbir Singh Badal made claims about ‘Progressive Punjab’.
The outcome of the financial mess is that Punjab is now under debt of more than Rs1 lakh crore. A bigger worry is that around 60 per cent of the loans have to be paid in seven years.
The Comptroller Auditor General (CAG) of India, in its report released today, called it an alarming situation.
The report on the state’s finances said the total debt on Punjab was around Rs64,000 crore in 2011-12 and it swelled to Rs1.03 lakh crore in 2015-16. This means that in five years, debt shot up by Rs10,000 crore every year. During 2015-16, public debt increased by Rs16,377 crore.
Another worry for the state government is nearing of loan deadlines. As per CAG, the state has to repay 58.51 per cent of its debt (more than Rs60,000 crore) in next seven years. The state government has to repay 18 per cent (Rs18,500 crore) of its debt in three years, 18 per cent (Rs18,500 crore) between three and five years, and 23 per cent (Rs23,367 crore) between five and seven years.
“This is an alarming position and the state is heading towards a serious debt repayment position, especially when its major irrigation projects had accumulated losses of Rs1,600 crore during 2011-16 and the application of debt raised by the state government towards creation of new assets remained below 6 per cent of total expenditure during 2011-16.
“The state needs to formulate a well-thought-out debt management strategy and step up resource mobilisation to ensure debt stability. Unless such efforts are made, the state would face serious debt servicing challenges, which could lead to a situation of debt trap,” the CAG observed.
On reasons behind the financial mess, the CAG found that the state’s revenue expenditure increased more than revenue receipts in the past five years. As per the report, revenue receipts increased from Rs26,234 crore in 2011-12 to Rs41,523 crore in 2015-16 at an average annual growth rate of 8.86 per cent. But at the same time, revenue expenditure grew at an average annual growth rate of 8.95 per cent. The revenue expenditure includes salaries, pensions and interest repayment.
“The revenue expenditure continued to constitute a dominant proportion (85 per cent to 95 per cent) of the total expenditure during 2011-16,” the CAG said.
Jagbans Singh, Principal Accountant General (Audit), Punjab, said: “Earlier, Haryana was considered a much smaller economy than Punjab. But recent Budget figures of Haryana suggest that it is almost one-and-a-half times bigger than Punjab.”
The capital expenditure decreased by Rs59 crore (1.89 per cent) over the previous year. “The capital expenditure incurred during 2015-16 was 62.98 per cent of budget estimates which indicates that asset creation was not given as much priority as intended in the budget estimates,” the CAG report observed.
