State dealt a blow on grants front

Ruchika M Khanna

Tribune News Service

Chandigarh, February 27

In a big blow to Punjab, the BJP-led NDA government has removed the state from the category of debt-stressed states. This will make the state ineligible for several special grants given by the Centre to debt-stressed states.

Even as Punjab’s total debt burden becomes unsustainable, with the figure escalating to Rs 1,13,052.95 crore by the end of this fiscal, the state has been kept out of the category of debt-stressed states.

Debt servicing alone is taking away Rs 11,496 crore in the current fiscal. With the Finance Commission refusing to accept Punjab as a debt-stressed state and keeping only Kerala and West Bengal in that category, it will weaken the claim of Punjab for getting a special package from the Centre for financial restructuring of the state.

The state’s Akali leadership, partners in NDA government at the Centre, had been hopeful of getting a special assistance package, including debt waiver, higher allocation of resources, higher devolution of central taxes etc. Punjab has been demanding this assistance since most of its debt burden accumulated during the period of militancy.

Dr Upinder Sawhney, a leading economist, says Punjab has been meted out a step-motherly treatment, by taking it out of the category of debt-stressed states, especially as the state’s debt burden had continued to increase manifold.

The Centre maintains while Rs 6,500.01 crore worth of special term loans taken during militancy were waived between 2000 and 2007, another Rs 406.39 crore was waived between 2005 and 2010, which the state had taken as loan against Centrally-sponsored schemes and direct loans from the Centre.

The Centre also maintains that Punjab has got interest relief on NSSF (National Small Saving Fund loans) loans. The Centre has also contested Punjab’s claim of having a lower share in Central taxes maintaining that the state got 99.36 per cent higher allocation under the 13th Finance Commission (2010-15) as compared to the allocation received under the 12th Finance Commission (2005-10).

Sources say the 14th Finance Commission has now maintained that Punjab will be a revenue-surplus state in the next five years. This seems to have been based on the assumption that all state government taxes will now be routed through the state’s consolidated fund. So far, the Punjab Infrastructure Development Fund and the Rural Development Fund are not routed through the consolidated fund.

Punjab refuses to do away with the power subsidy, but the Centre wants it to rationalise it saying the amount was more than the revenue deficit of the state. Finance Minister Parminder Singh Dhindsa told The Tribune that the Finance Commission had included the power subsidy in the state's total revenue receipts, to make calculations regarding Punjab becoming a revenue-surplus state. "This is an indirect agriculture subsidy and could not be included in the total revenue earnings. We are disappointed," he said.