Centre cuts Punjab's borrowing limit by Rs 18K crore

Ruchika M Khanna

Chandigarh, June 2

The cash-strapped Punjab Government suffered a big jolt after the Centre slashed the borrowing limit by Rs 18,000 crore.

The move comes days after the Centre had cut the borrowing limits of Kerala (Rs 17,000 crore) and Himachal Pradesh (Rs 5,500 crore).

Punjab’s borrowing limit has been slashed from Rs 39,000 crore to Rs 21,000 crore as a consequence of the state government switching back to the old pension scheme. The Centre had apprehensions that the state would stop contributing Rs 3,000 crore annually to the Pension Fund Regulatory and Development Authority (PFRDA).

The Centre has also stopped the grant of Rs 2,600 crore (Special Assistance Grant for Development of Capital Assets) and Rs 800 crore grant under the National Health Mission.

Though the Centre releases funds under the NHM and the Special Assistance Grant in two installments, Punjab has not received the first payment so far (neighbouring states have already received money under these heads).

Sources in the Finance Department said the cuts had been imposed for “violating norms of capital expenditure”, used to create capital assets like roads and flyovers.

The ‘violations’ also include renaming of Ayushman Bharat Health and Wellness Centres as Aam Aadmi Clinics and using photos of Chief Minister Bhagwant Mann on the buildings (scheme allows only printed graphics).

“In total, the state has received a cut of Rs 21,400 crore. The borrowing limit should not have been slashed as Punjab is following the Fiscal Responsibility and Budget Management Act,” said a top functionary of the Finance Department. He said the state government had presented the details to the Finance and the Health Ministry and reduction in borrowing limit would hit hard.

Sources said the state government had assured the Centre that they would contribute its share of Rs 3,000 crore to the PFRDA.