Fund crunch: Govt staff salary on hold

Ruchika M Khanna

Tribune News Service

Chandigarh, October 12

Punjab is facing one of its worst ever financial crises ever. The state has gone into overdraft of over Rs 500 crore, after exhausting its ways and means advance (WMA) limit of Rs 560 crore. Having coughed up Rs 1,183 crore for cotton and sugarcane growers, the government does not have money to pay salaries to its employees.

Hundreds of state government employees, whose salaries were not released by the state treasury on October 1 or October 3 (the first two days working days of the month), are still awaiting their dues.

All payments from the state government treasury have been stopped since October 3, including salaries, retirement benefits, TA/ DA bills and reimbursement of medical bills. Even withdrawals from the general provident fund of employees have been stopped since August 13—till the government manages to clear its overdraft. On an average, Punjab requires Rs 2,100 crore each month to pay salaries and pension to its employees.

Various organisations of employees are expected to embark on the agitation route from October 14.

Harnek Singh Mavi, secretary of the Punjab Subordinate Services Federation, said, “On Wednesday, the employees will gather outside treasury offices in all districts of the state and burn effigies of the state government for its failure to pay their salaries.

According to norms laid down by the RBI, no state government can remain in overdraft for more than 15 working days. Sources say the government is hoping to float and sell its state development loan of Rs 800 crore soon- which will help it tide over the fiscal crisis. This year, the state government can raise Rs 12050 crore through market loans.

Sources in the Finance Department said the reason for the fiscal crisis was that the state government had to pay Rs 1,183 crore from the state’s consolidated fund to quell farmers’ disquiet over the past two months. While Rs 540 crore was released to cooperative sugar mills of the state in September, Rs 643 crore was released for compensation to cotton growers whose crop had been damaged in whitefly attack.

The state already has a revenue deficit of around Rs 1,500 crore—with the revenue receipts till September hovering around Rs 23,500 crore and the revenue expenditure far exceeding it (Rs 25,000 crore). There has reportedly been an increase of about 10 per cent in the total committed liabilities of the state government this year, but the state’s own tax and non-tax revenue has not shown desired growth. It is growing at just 4 per cent, which has become a major cause for concern.