Economists seek moratorium on Punjab's debt

Tribune News Service

Chandigarh, December 4

Three eminent economists of Punjab, in a letter to Union Finance Minister Nirmala Sitharaman, have demanded a special economic package for the state in the forthcoming budget for 2023-24.

Write to FM for special package

• According to RBI, Punjab has accumulated a debt of Rs 3 lakh crore in 2021-22. This comes out to be 53.3 per cent of the Gross State Domestic Product (GSDP) in the end of March 2022
• The annual interest liability turns out to be Rs 20,315 crore in 2021-22, which is 45 per cent of the total own tax revenue of the state government in 2021-22
• Due to non-sustainability of the debt, the 13th Finance Commission has put Punjab in the category of debt stressed state, but it has now transitioned to a debt trapped state

The economists — Dr Lakhwinder Singh, Dr Kesar Singh Bhangoo, and Dr Sukhwinder Singh — have urged the FM for granting a moratorium on debt of Punjab at least for the next seven years. “This will leverage Punjab of interest payment, which is 45 per cent of its own tax revenue for capital expenditure,” they have said.

“For the revival and rejuvenation of Punjab economy, the Union Government, in its Budget, should grant annual investment deficiency package of the order of Rs 20,000 crore for 2023-24 and subsequently till the grant of moratorium on debt ends. This will build the momentum of development process and will crowd in private investment, especially of a Punjabi diaspora. This will induce the diaspora to send higher level of remittances that has been remained handy to ease balance of payment difficulties of the country. It will also provide right kind of signals to the foreign investors to invest in Punjab,” they have said.

The three signatories have said their submissions, if considered while formulating the Budget 2023-24, would go a long way to build Indian economy on the pillars of sub-national economies like Punjab.

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