Punjab debt: CM tells governor 57% of ₹47,107-cr loan spent on paying interest
With legacy debt of ₹2.82 lakh crore at the end of the financial year 2021-22, which is projected to touch to ₹3.47 lakh crore in FY-2024, Punjab is among the most indebted states in the country.
Days after Punjab governor Banwarilal Purohit asked for details of the debt taken by the Aam Aadmi Party government, chief minister Bhagwant Mann on Tuesday informed him that his government has added ₹47,107.6 crore to the state debt in the past one-and-a-half years, pointing out that 57% of it has gone into meeting the interest liability on outstanding debt of the state.
In a three-page reply to the governor, Mann said the net addition to the state’s debt has been ₹47,107.6 crore from April 1, 2022, to August 31, 2023, which includes not only market loans but also loans from NABARD, externally aided project loans allowed by the Government of India and long-term loan under special assistance for creation of capital assets. Of this, ₹32,447.11 crore were added to the state debt during the 2022-23 fiscal and ₹14,660.5 crore between April 1 and August 31 this year. He said that ₹27,016 crore went into interest repayment on the debt that the government inherited.
Seeking accountability
In a letter to Mann on September 21, Purohit sought details of the utilisation of the debt of ₹50,000 crore raised by the AAP government during its tenure. “…the debt of Punjab rose by about ₹50,000 crore during your regime. Details of utilisation of this huge amount may be furnished to me so that I will be able to convince the Prime Minister that money has been properly utilised,” the governor had written in response to the CM’s letter requesting him to take up the issue of pending Rural Development Fund (RDF) of ₹5,637 crore with the President and the PM.
The governor’s missive triggered an onslaught against the AAP government by the opposition, particularly the Congress, which accused it of “lack of transparency and accountability” in the utilisation of money raised through loans. With an outstanding debt of ₹2.82 lakh crore at the end of the financial year 2021-22, which increased to ₹3.12 lakh crore at the end of 2022-23, as per revised estimates, Punjab is already among the most indebted states in the country. The state’s debt-GSDP ratio stands at 47.6%. The outstanding debt is projected to touch ₹3.47 lakh crore on March 31, 2024.
At a public meeting in Patiala on Monday, Mann had announced that he would send his reply to the governor on Tuesday.
CM blames predecessors
In his letter, Mann, while blaming his predecessors, wrote that lingering issues left behind by previous governments were dealt on priority and his government used both debt and its own revenue resources to fund organisations/schemes ignored by them, utilised the new debt to create capital assets and undertake development activities in the state.
The CM said he was committed to honouring the rightful liabilities and servicing the debt in a timely manner while striving to mobilise resources to fund development. “Our government is working 24x7 to mobilise additional resources,” he said, sharing details of revenue receipts. He said these additional receipts have helped in making value-accretive investments while initiating payment of arrears and unpaid dues including but not limited to the implementation of sixth pay commission, UGC scales, power subsidy arrears to PSPCL, payment of arrears of aata-dal scheme, arrears of sugarcane farmers, etc.
Mann said he hoped this information put into perspective the challenges faced by the state government due to legacy debt burden. “I believe that you would be in a position to convince the Prime Minister that not only the debt has been properly utilised but all-out efforts are being made to consolidate the state’s finances,” he said, urging Purohit to seek the release of the pending RDF and according a moratorium on debt repayment of the state for at least five years. This, he said, would give fiscal elbow room to his government to accelerate the growth of revenue and the pace of development.
The exchange of letters on the politically sensitive issue of debt is the latest standoff between Purohit and Mann, who have had frequent run-ins over the past year on a number of issues.