Vishav Bharti
Chandigarh, June 29
Quite contrary to the tall claims made to bring Punjab out of the fiscal mess five years back, the five-year Congress rule pushed the state further into vicious debt trap, says a latest report by the Comptroller Auditor General (CAG) tabled in the Punjab Vidhan Sabha on Wednesday.
As per the ‘the State of Finances Report’ for the financial year 2020-21, it was found that the outstanding total debt of the state was Rs 2,49,673 crore (47.13 per cent of Gross State Domestic Product) as on March 31, 2021. In just four years of the Congress rule, between 2017-18 and 2020-21, the state’s debt increased by Rs 54,521 crore.
Total debt of the state government typically constitutes internal debt of the state (market loans, ways and means advances from the RBI, special securities issued to National Small Savings Fund and loans from financial institutions, etc.), loans and advances from the Central Government, and public account liabilities.
Ideally, the borrowed funds should be used to fund capital creation and developmental activities. However, in Punjab borrowed funds were being largely used for meeting current consumption and repayment of interest on outstanding loans, which as per the CAG “is not a healthy trend”.
The past practice shows that during the period 2016-21, the state government utilised 62 per cent of its borrowings for repayment of earlier borrowings and in the same period 24.2 per cent borrowed money was spent on revenue expenditure. Just 10 per cent of the borrowed amount in the last five years was spent on creating assets like land and buildings.
“Thus, the borrowed funds were being used mainly for meeting current consumption and repayment of earlier borrowings instead of capital creation/development activities,” said CAG.
The financial condition also sounds alarming for the current AAP government as the state has to repay 23.29 per cent (Rs 50,071 crore) of its debt within the next three years, 13.45 per cent (Rs 28,922 crore) between 3-5 years and 15.94 per cent (Rs 34,287.44 crore) between 5-7 years. It signifies that the state has to repay 52.68 per cent of its debt (Rs 1,13,282 crore) in the next seven years.
Expenditure on health, education up
The ratio of expenditure on education and health to total expenditure in Punjab went up from 8.94 per cent and 2.86 per cent in 2016-17 to 13.25 per cent and 4.20 per cent in 2020-21, respectively, while the ratio of total expenditure to GSDP and capital expenditure to total expenditure decreased from 23.66 per cent to 17.31 per cent and 45.25 per cent to 5.82 per cent, respectively, during the same period.
Congress rule further pushed state into debt trap, says report
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