Capt Amarinder Singh seeks special Debt relief package to revive Punjab’s fiscal health
Underscoring the tight financial situation faced by the state, Chief Minister Captain Amarinder Singh on Wednesday sought from the 15th Finance Commission a Special Debt Relief Package to support his government’s efforts to revive fiscal health, along with a one-time package to enable payment of the entire debt of the distressed farmers of Punjab.
At a meeting of the 15th Finance Commission here, the Chief Minister noted with concern the permanent loss of revenue suffered by the state post GST implementation, whose compensation from the Centre will also end from July 1, 2022, resulting in a drastic fall in revenue in the range of Rs. 10,000-12,000 crore per annum. In view of the loss, the Chief Minister urged the Commission to recommend a graded compensation tapering formula to the Government of India for states like Punjab beyond June 30, 2022, so that they do not simply ‘fall off the cliff’.
Highlighting the special problems of the state, with its highest SC population in percentage terms, its long and thickly populated border with Pakistan, its riverine and sub-mountainous areas and flight of industry due to concessions to neighbouring states, Captain Amarinder shared his government’s wish list with the Commission, underlining the need for a special package for Punjab, citing the various roadblocks to its development despite his government’s numerous programmes and persistent efforts.
The Chief Minister, while submitting a formal memorandum to the Commission, pointed out that Punjab had the highest Interest Payments to Total Revenue Receipts ratio and Outstanding Debt to GSDP ratio amongst the GCS. The package, he said, could be provided under the General Debt Relief Scheme, linking it to the fiscal performance of the states as previously done by successive Finance Commissions.
With a debt of Rs. 2.10 lakh crore, which his government had inherited from the erstwhile SAD-BJP regime, Punjab was a revenue deficit state, the Chief Minister noted, adding that the last Finance Commission had omitted the state from revenue deficit grant states, though it was included by the 12th Finance Commission.
Even as he listed out Punjab’s strengths as a land of the brave and the food bowl of the nation, the Chief Minister said the internal security threat arising out of a hostile neighbour and threat of spillover of J&K militancy, along with the problem of drugs further made the state a fit case for a special package.
On the issue of agricultural debt relief, while his government had already announced a package of Rs. 8000 crores for over 10 lakh small & marginal farming households, there was need for a comprehensive package and assistance from the Centre, said Captain Amarinder, urging for a one-time debt waiver to help out the farming community. Further, to give relief to the farmers, promote agriculture diversification and realize Government of India’s vision of doubling of the farm income, he requested the Commission to provide for deficiency price support in maize and cane production to the extent of Rs. 12,350 crore and Rs. 300 crore, in order to give a boost to the allied activities in the farm sector.
Referring to the Rs. 31,000 crore Food Account which the Akali government had taken over in its last days, the Chief Minister said the Government of India should take over the debt or Punjab should be given matching revenue deficit grant to offset the committed annual interest payment liability of Rs. 3240 crores.
Mooting increase in devolution to states to allow greater flexibility to use devolved funds qua relevant Centrally sponsored schemes, the Chief Minister also sought an increase in Punjab’s share in devolution from 1.5% to 2%, noting that the same had been reduced from 2.45% to 1.57% in the last 40 years. He suggested addition of certain new elements within the existing parameters like SC/ST to facilitate equitable distribution of resources among the states.
The Chief Minister also requested the Commission to consider the contribution of the State to the nation’s economy while distributing the resources amongst the states by giving a weightage of 10% to contribution by the State economy in the aggregate GSDP. In order to encourage and incentivize sustainable development, he also proposed a weightage of 1% to Renewable Energy Source (RES) Power Generation, as a supplement to the already existing parameter of Forest Cover and redefining the composite parameter as ‘Sustainability Index’.
Expressing grave concern about the critical water situation in the state, Captain Amarinder sought a Rs. 12000 crore grant for complete water cycle management in both rural and urban areas. On its part, his government was making considerable efforts to resolve the problem and had recently signed an MoU with Israel’s National Water Agency Mekorot, he pointed out. A pilot project of Direct Benefit Transfer of Electricity (DBTE) for agriculture consumers under the banner of “Paani Bachao Paise Kamao” scheme had been initiated with the intent of saving ground water and motivating farmers to cultivate diversified crops. The Government of Punjab had also initiated a programme to provide piped potable drinking water to every household in rural areas by December, 2019, he informed the Commission.
In line with the commitment of the State for sustainable development, he also asked the Commission to provide a financial assistance of Rs. 500 crore for river cleaning programme, and Rs. 3,682 crore for ground water improvement by river augmentation through afforestation.
Referring to the problem of drug abuse, which he said was directly attributable to the location of the State, the Chief Minister said Punjab shared its borders with Pakistan, which itself was well-connected with one of world’s largest opium-producing regions that enable narcotics to enter Punjab more easily than other parts of India. He brought to the Commission’s notice that the drug epidemic in Punjab also had strong correlation with rising unemployment among the youth. Punjab has a high youth unemployment rate at 16.60% compared to the national average of 10.20% due to slowdown in agricultural productivity, lack of industrialization, mismatch between educational qualifications, etc. He requested the Commission to provide Rs. 300 crore for expansion and strengthening of OOAT clinics to rehabilitate patients of drug abuse,
Captain Amarinder further urged the Commission to provide support of Rs. 5,500 crore and Rs. 6,719 crore to its power infra and road infra, respectively, which the State had created majorly from its own resources, much ahead of the others, and was now neither getting the capital grant nor the maintenance expenditure for same under the various Central Government schemes. He also sought Rs. 100 crore for strengthening the cancer infrastructure and Rs. 505 crore for providing sewerage facilities in the villages on periphery of our towns.
The Chief Minister told the Commission that despite the financial crunch, his government was making the best of efforts to boost development and improve the quality of living on all fronts. Punjab was the second best performing large state in terms of Health as per the Health Index 2018, and had achieved 100% rural electrification way back in 1976 and every town and village stands electrified, with one of the lowest Transmission & Distribution Losses (T&D) in the country, he noted. What is more, the state is ranked 2nd in the country in terms of road connectivity and our rail density is better than the national average. It ranked 2nd in Logistics Ease Across Different States (LEADS) Index, on account of our excellent performance on various parameters, namely, infrastructure, service, timeliness, safety & tracking and competitive pricing.
The State led the country in abolishing the practices of affidavit in citizen services as also shunning the VIP culture by abolishing the red beacon culture, much ahead of others, the Chief Minister noted. His government had, in the last two years, signed 305 MOUs with an investment potential of Rs 42,905 crore and an employment potential of about 1 Lakh in the last 20 months, he further disclosed. To ensure transparency and accountability, his government had also enacted the Punjab Transparency and Accountability in Delivery of Public Services (including electronic service delivery) Act in 2018 with an objective to provide citizen/ centric services to its people in digital mode in next three years.
The Chief Minister said he was saddened by the fact that the necessary development expenditure in Punjab has starved for want of funds against the backdrop of lack of adequate support from the Centre and the already stressed financial position of the State. He requested the Commission to pay special attention to the financial position of the State so that it comes out of the clutches of the vicious debt trap and work with utmost sincerity and integrity towards realizing its vision of a prosperous Punjab and prosperous India.
Finance Minister Manpreet Badal raised objections to the industrial concessions given to the neighbouring states, asserting that the central government had no right to destabilize industrial set-up in any state by offering concessions to neighbouring states.
The Finance Commission was represented by Chairman N.K. Singh, Chairman, along with members Dr. Anoop Singh, Dr. Ashok Lahiri and Dr. Ramesh Chand, as well as Arvind Mehta, Secretary to the Commission and other officers of the Commission.
The state government was represented, besides the Chief Minister, by Cabinet Ministers Brahm Mohindra, Tript Rajinder Singh Bajwa, Charanjit Singh Channi, OP Soni, and senior officers.