Where has Rs 12,589.59 crore of Punjab's State Disaster Response Fund gone?

The missing details of the expenditure of Rs 12,589.59 crore from the State Disaster Response Fund (SDRF) holds the key to Punjab getting special aid from the Centre for its flood relief programmes.

The state has not been able to provide the specific details of the utilisation of this fund despite questions being raised by the Comptroller and Auditor General of India (CAG) and the Centre.

The state government is compiling reports of the special girdawari ordered for assessing crop loss. Although the Centre has refused to change the norms for the grant of the compensation through the SDRF funds at Rs 6,800 per acre, the state has announced a substantially increased compensation of Rs 20,000 per acre — the balance of Rs 13,200 per acre, it says, it will give from its kitty. Certainly, till the Centre-state difference of opinion is settled, the state will have to shell out the money from its own limited resources.

Home Minister Amit Shah last week told Chief Minister Bhagwant Mann that Punjab had “sufficient funds to the tune of Rs 12,589.59 crore for relief and restoration to the affected”. The CAG report for the financial year that ended March 31, 2023, had indicated that the state had Rs 9,041. 74 crores in the SDRF funds. Subsequent additions till 2025-2026 showed the total at Rs 12,589.59 crore.

Finance Minister Harpal Cheema told the recent special session of the Vidhan Sabha that between 2017 and 2022, Punjab received Rs 2,061 crore, of which the Congress govt spent Rs 1,678 crore; that in the last three years it received Rs 1,582 crores, of which Rs 649 crore was utilised.

It is learnt that the main reason for the current situation is that state has not maintained a separate account for the SDRF expenditure as required. Although records are available in the ledger, the money was kept in the general pool and spent on meeting routine government expenditure.

The auditor’s report read: “The accretions to the SDRF, along with the income earned on its investments, are to be invested in the Central government dated securities, auctioned treasury bills and other interest-earning deposits with scheduled commercial banks.”

Procedurally, the amount should not have been touched. After the CAG report pointed out the flaw, the state assured the issue would be taken care of. It is said that several other states are learnt to be faced with the same issue.

There is no denying the fact that Punjab is not in the pink of its financial health. The state needs money to meet its emergency expenditure. The burgeoning debt burden is projected to be Rs 4.17 lakh crore by the end of fiscal year 2025-26. And there seems no way out with its low tax revenue base, freebies and subsidies.

Under the circumstances, the state will have to look towards the Centre for the way forward. The state will have to approach the Centre afresh with its records of expenditure and a commitment to return the missing amount over a period of time. The Centre, too, will have to accept the ground reality of a state devastated by floods and rework the compensation amount according to the actual loss on ground.

Ground reports of devastation caused by floods show that the special assistance of Rs 1,600 crore announced by the Centre for the loss suffered by Punjab is really a pittance.