RAGING ISSUES: Rising debt burden of Punjab hits growth

Vijay C Roy

Chandigarh, January 21

While presenting the first budget of the Congress government in 2017, Finance Minister Manpreet Singh Badal had stressed on gradually reducing the debt burden on the state. However, like in the previous regime, the debt swelled over the years.

According to the budget document, by the end of the current fiscal year, the state’s outstanding debt is estimated to reach Rs 2,73,703 crore, an increase of Rs 91,000 crore since the current government took over in March 2017. The rising debt, means a hefty outgo on interest payments.

The burgeoning debt and increasing committed liabilities have cast a shadow on the state’s economy and are proving to be a huge drain on the state exchequer, eating into the bulk of its revenue.

A major part of the state government earnings and borrowings goes into servicing its debt and meeting committed liabilities such as salaries, pensions, power subsidies and debt waivers instead of capital formation.

According to the government data, Punjab is among the most indebted states with a debt-gross state domestic product (GSDP) ratio of over 40%. The outstanding debt as a percentage of the GSDP will further increase in 2021-22.

The projected revenue deficit and fiscal deficit for the current fiscal are Rs 8,622 crore (1.42% of the GSDP) and Rs 24,240 crore (3.69%), respectively. However, experts feel the outstanding debt will surpass the budget estimates, so will the fiscal and revenue deficit due to freebies doled out by the current regime to woo voters.

What is more worrisome is the state government’s failure to explore new avenues to generate its own revenue and plug loopholes in collection.

As far industrialisation is concerned, the state government recently said it attracted investments worth Rs 1.02 lakh crore, which are under various stages of implementation with more than 52% of these projects having achieved commercial production and another 36% are in various stages of construction.

However, the industry is of the view that high land prices and procedural delay have been acting as a stumbling block in attracting new investment. They feel the MSMEs have been completely ignored.

What was promised

• Enhance industrial development fund to Rs1,000 cr
• Special budgetary allocation for industrial development
• New land bank for industrial development
• Revival of existing industrial units
• Development of sports goods industry; new focal point in Jalandhar and R&D centre

What has been delivered

• Simplification of CLU procedure for industrial units
• Reduction of fixed charges of medium scale units by 50%
• Deemed approval in cases of expansion for MSMEs

Attracted investment

We have taken landmark decisions to attract fresh investments and boost the existing industry. — Charanjit Singh Channi, CM

GSDP hasn’t grown

The govt claims to have drawn Rs1L crore investment, but the GSDP hasn’t increased. In fact, big industrialists have moved out of Punjab. — Aman Arora, AAP

Industry left state

A sizeable chunk of industry migrated. It’s a big failure on part of Congress govt and belies claim of improving industrial climate. — Jeevan Gupta, BJP