The prominent reason for change of government in Punjab was the freebie politics by the Aam Aadmi Party. It made very tall fiscally unrealistic promises to lure the voters. It seems that those promises will prove to be just a farce and mere election sloganeering. As the Punjab CM Bhagwant Mann is making an attempt to replicate his party’s convener and Delhi CM Arvind Kejriwal. He is setting the pitch for future excuses in a sure-short case of non-fulfilment of poll promises. So, let’s analyse the new facade they are cropping up.
White paper for future black outs
Just two days before the maiden Budget announcements, the Punjab government tabled a white paper. Finance Minister Harpal Singh Cheema tabled the white paper regarding the dilapidated fiscal situation of the state. It depicts the immediate and medium-term pending liabilities left by the previous Congress government while demitting office. The majority of these liabilities are on account of Sixth pay commission arrears, power subsidy arrears, atta-dal scheme and crop loan waiver.
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The Punjab government has a total pilled debt of Rs 24,351 crores. Around 57% of the total, Rs 13,759 crores is the pending liability of sixth pay commission. It was the major poll promise of the then Congress government which implemented it at the fag end of its tenure in a very hasty manner. The document questioned the manner of the July 2021 announcement by the then Congress government. The document lambasted the reckless spending by the Channi government.
In an attempt to woo the voters at the last moment, then CM Charanjeet Singh Channi in September 2021 doled out Rs 9,047 crores worth of scheme as one-time settlements and waivers. In individual capacities also the Congress government emptied the government coffers. The CM and Ministers misused discretionary grants. The CM and top seven new cabinet ministers released funds to the tune of Rs 150 crores and Rs 17.50 crores respectively, at a time when they had a limit of Rs 50 crores for CM and Rs 5 crores for Cabinet Ministers.
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According to the document, the Punjab government has to pay Rs 7,117.86 crores to the Punjab State Power Corporation Limited (PSPCL) in the form of power subsidy. This humongous power subsidy bill is because of the supply given to agriculture, domestic and industry consumers last year. Additionally, Rs 2,274 crores for atta-dal scheme and Rs 1,200 crores for crop loan waiver have also not been paid. The new government has to pay these liabilities in the coming years.
No Money: So no freebies, Enjoy AAP’s rule where we just do sweet talk
The Punjab government wasted around 73 pages to come to realise that the state is suffering from debt trap because of loan waivers, populist measures and freebies. The timing of this White paper is very crucial as it comes just before the Budget announcement by the Mann government. CM Mann made two major poll promises – free electricity for all domestic consumers from July 1 and Rs 1,000 per month to every woman, despite knowing the severe fiscal constraints of Punjab.
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These two freebies are estimated to bring along an additional burden of more than Rs 15,000 crores annually on the exchequer. The state revenues are also under free fall as at the end of Goods and Services tax (GST) compensation regime on 30th June, the state will face a shortfall of Rs 15,000 crores for FY 2022-2023 and Rs 21,000 crores per annum thereafter.
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The document mentions the state to be in a condition of ‘a classical debt trap‘. A condition in which a large portion of the annual gross debt taken by the government is spent in repayment of old debt and interest payment and not for future development and prosperity. The White paper states the outstanding liabilities at Rs 2.63 lakh crores as per revised estimates. This takes the debt to GSDP ratio to the danger level of 45.88%.
As the AAP government in Punjab with this white paper has for now put all the onus of this debt trap on the previous Channi government. But the reasons stated as freebies, loan waivers and reckless spending for the state’s debacle are very much true. Ironically, the same things are being touted by the AAP government to woo voters. But it is foolhardy to presume that the Mann government would smell the coffee and devise fiscally prudent ways to strengthen the state’s fiscal situation. So better be prepared for ugly blame game and crying wolf on the state’s fiscal constraints to not fulfil the freebie policies.
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