Govt juggling funds to stay afloat

Ruchika M. Khanna

Tribune News Service

Chandigarh, January 28

The state’s fiscal mess could not get worse than this. Even as the entire top brass of the ruling alliance is busy in Delhi to campaign for the crucial Assembly elections, the government barely averted falling into the trap of fiscal profligacy.

Had it not been for the loan of Rs 195 crore taken by the state government against national small savings (NSS) from the Centre today, payments from the Reserve Bank of India to the cash-strapped government would have stopped.

As Punjab entered into the final day (14th consecutive day) of being in overdraft, the Finance Department, running in absence of the state’s political leadership, heaved a sigh of relief as Rs 195 crore was released by the Centre against NSS and another Rs 200 crore was deposited in the state’s near empty treasury as receipts from state’s own taxes.

This amount helped Punjab against defaulting on overdraft, thus saving it the embarrassment of stopping all its payments by the RBI.

Finance Department officials said after the government exhausted its ways and means advance limit of Rs 540 crore earlier this month, it had remained in overdraft, touching a high of Rs 500 crore.

The RBI has clearly laid down that in case the state exhausts its ways and means advance limit as well as special ways and means advance limit and still continues to remain in overdraft for 14 consecutive working days, the regulatory bank can stop payments to such states.

The Finance Department struggled through the past fortnight, juggling resources from wherever available to get out of the overdraft limit. Last week, the state government readied a proposal to borrow Rs 750 crore from the Punjab Infrastructure Development Board (PIDB), but as the state’s own taxes started trickling in earlier this week, the government had prepared to borrow Rs 200 crore from the PIDB had the loan against NSS not come in.

But this reprieve will be shortlived. Though the overdraft is cleared, the state is utilising its ways and means advances. On February 2, it again has to pay a salary bill of approximately Rs 1,100 crore and a pension bill of Rs 500 crore. The state’s own receipts will start coming in around the end of the first week of February. But despite this, the state will once again be in overdraft.