Punjab debt Rs 2.6L crore, likely to cross Rs 5L cr in 10 years: CAG

Tribune News Service

Vishav Bharti

Chandigarh, March 7

The way the state’s finances are being managed, Punjab’s public debt is likely to cross Rs 5 lakh crore in 10 years. This fact came to the fore in a report on ‘State Finances’ for 2021-22 prepared by the Comptroller and Auditor General and tabled in the Assembly on Tuesday.

How borrowed funds were utilised

The state used the borrowed funds for meeting the current consumption and repayment of interest on outstanding loans but it is not a healthy trend. During 2017-22, the government utilised between 59% and 73% of its current borrowings for repayment of earlier borrowings. State incurred 64% of the total revenue expenditure on committed liabilities, leaving only 36% for the priority sector

• Subsidies constituted 11 per cent to 18 per cent of the revenue expenditure during 2017-22
• Power subsidy constituted a major portion of the total subsidies ranging between 68 per cent and 99 per cent
• During 2021-22, the government spent ? 8,010 crore (25 per cent of the borrowed funds) on capital expenditure which showed a notable improvement in utilisation of borrowed funds towards creation of concrete assets

The way out

• The government may consider forming a committee to assess the reasons for insufficient return on investment from statutory corporations, government companies, cooperative banks and societies and to suggest the remedial measures
• The state may ensure time-bound completion of the incomplete projects
• The government should mobilise its resources to minimise dependence on borrowings

The CAG observed that taking the past trends into account, by 2031-32, the projected outstanding debt stock will increase to Rs 5,14,697 crore approximately. “Resultantly, revenue deficit will increase to Rs 50,134 crore and the ratio of interest payment to revenue deficit will increase to 118 per cent,” the CAG observed.

During the five years of the Congress rule, former Finance Minister Manpreet Badal repeatedly made claims about bringing the state out of the financial mess but, during his tenure, the state added Rs 66,000 crore to the existing debt.

The CAG observed that the total debt had been on the rise as it increased by 33.89 per cent from Rs 1,95,152 crore in 2017-18 to Rs 2,61,281 crore in 2021-22, which included the outstanding long-term loans raised by the state government for one-time settlement of Legacy Cash Credit Accounts for food procurement operations during 2016-17; issuing of bonds for clearing debts of Punjab State Power Corporation Limited (PSPCL) in compliance with the implementation of the Ujwal Discom Assurance Yojana (UDAY) during 2015-17.

As far as debt maturity and repayment profile is concerned, the state has to repay 24.92 per cent (Rs 90,545 crore) of its public debt within three years, 14.58 per cent (Rs 52,959 crore) between 3-5 years, 16.76 per cent (Rs 60,891 crore) between 5-7 years and 20.38 per cent (Rs 74,028 crore) between 7-10 years. It signifies that the state has to repay 76.64 per cent of its debt (Rs 2,78,425.29 crore) in 10 years.

As per the CAG, the state will have to repay a public debt of Rs 27,843 crore (including approximate interest in respect of debt outstanding at the end of 2021-22) annually till 2031-32. “In addition to the debt outstanding at the end of 2021-22, the state will have to resort to further borrowings every year to cover the resource gap, which will result in increase in debt and more funds being utilised for repayment of earlier borrowings,” the report said.

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