Ruchika M Khanna
Tribune News Service
Chandigarh, March 6
As Punjab Finance Minister Manpreet Singh Badal gets ready to present the last Budget of the government on Monday, the most worrisome factor will be the state’s unsustainable debt burden, with the outstanding debt set to hit Rs 2.60 lakh crore, with an additional Rs 12,000 crore borrowing allowed in 2020-21 because of a Covid-induced economic meltdown.
In the past four years, the state’s outstanding debt has increased by over Rs 77,000 crore, with almost Rs 30,000 crore of debt being accumulated in the present financial year itself. With the state having a population of 2.7 million, the per capita public debt in the state is as high as Rs 96,000. The state’s debt to GSDP ratio will also remain much above the prescribed limit of 30 per cent, and will also remain the highest in the country.
This being the last Budget to be presented by the Congress government, one can expect the tradition of announcement of many sops. While employees and pensioners can expect a bonanza with Rs 7,000 crore being set aside for the implementation of the Sixth Pay Commission, the Budget will have sufficient outlays for the agriculture sector (for debt waiver scheme), youth and in public education and health. With the state’s revenue receipts still hovering at 63 per cent of the targeted revenue of Rs 88,004.31 crore, the government is relying on a revenue deficit grant of Rs 9,000 crore to be received from the Centre’s Finance Commission and an additional borrowing limit of 2 per cent of GSDP (Rs 12,000 crore) allowed in the current fiscal. Though this additional borrowing will bail out the government and allow it to fulfil its political compulsions in the election year, it will only further add to the state’s debt burden and increase interest repayments in the years to follow.
Figures available with The Tribune from the Reserve Bank of India show that the percentage of total outstanding liabilities to GSDP was 40 per cent last year, which is the worst in the country in comparison to other states.
Though it was 42.80 per cent in 2016-17, during the last year of the previous Akali-BJP government, and the ratio had come down. The rise in the actual debt is, however, phenomenal. The interest payment alone on this huge public debt this year is around Rs 19,075 crore. This means that 21.6 per cent of the state’s total income this year is going only for the payment of interest.
Dr Lakhwinder Singh, eminent economist, says the more worrisome issue is the repayment of rate of interest on this debt, which was the highest among Indian states in proportion of the state’s revenue receipts. “This is a big constraint on spending from the revenue account for economic and social services,” he says.
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