Punjab seeks debt relief package from the 15th Finance Commission to revive fiscal health

Chandigarh: The Punjab government on Wednesday sought a special debt relief package from the 15th Finance Commission to revive the state’s fiscal health. It also sought a one-time package to pay the entire debt of the state’s distressed farmers. At a meeting of the 15th Finance Commission here, led by its Chairman N K Singh, Chief Minister Amarinder Singh also raised concerns over the loss of revenue to the state after the GST rollout. He also said the compensation for the loss from the Centre would also end from 1 July, 2022, resulting in a drastic fall in revenue in the range of Rs 10,000-12,000 crore per annum. In view of this, the chief minister (CM) urged the Commission “to recommend a graded compensation tapering formula to the Centre for states like Punjab, beyond 30 June, 2022, so that they do not fall off the cliff”, according to an official release. Underlined the need for a special package for Punjab, he highlighted the state-specific issues such as the highest Scheduled Caste population in percentage terms, the long and thickly populated border with Pakistan, riverine and sub-mountainous areas, and flight of industry due to concessions to the neighbouring states. [caption id=“attachment_4375177” align=“alignleft” width=“380”] File image of Punjab chief minister Amarinder Singh. AFP[/caption] While submitting a formal memorandum to the Commission, the chief minister said Punjab had the highest ‘interest payments-to-total revenue receipts’ and ‘outstanding debt-to-gross state domestic product’ ratios, the release added. The package, he said, could be provided under the Centre’s Debt Relief Scheme, linking it to the fiscal situations of the states as previously done by the successive Finance Commissions. With a debt of Rs 2.10 lakh crore, Punjab was a revenue deficit state, he said, while adding that the previous Finance Commission had omitted the state from revenue deficit grant states, though it was included by the 12th Finance Commission, according to the release. Urging for a one-time debt waiver for farmers, the CM said while the state government has already announced a package of Rs 8,000 crore for over 10 lakh small and marginal farmers, there is a need for comprehensive package and assistance from the Centre. He also requested the Commission to provide for a price deficiency support of Rs 12,350 crore and Rs 300 crore, respectively, in maize and cane production, in order to boost allied activities in the farm sector. Referring to the Rs 31,000-crore “Food Account” which the erstwhile Akali government had taken over in its last days instead of adjusting it between the state and Centre, the CM said the central government “should take over the debt or Punjab should be given a matching revenue deficit grant to offset the committed annual interest payment liability of Rs 3,240 crore”. Mooting increase in devolution to states to allow greater flexibility to use funds for relevant Centrally sponsored schemes, the CM also sought an increase in Punjab’s share in devolution from 1.5 percent to 2 percent, noting that the same had been reduced from 2.45 percent to 1.57 percent in the past 40 years. He also sought a Rs 12,000-crore grant for complete water cycle management in rural and urban areas to address the critical water situation in the state. The CM also asked the Commission to provide financial assistance of Rs 500 crore for a river cleaning programme, and another Rs 3,682 crore for groundwater improvement by river augmentation through afforestation. Referring to the problem of drug abuse, the CM said Punjab shares its border with Pakistan, which itself was well-connected with one of the world’s largest opium-producing regions that enable narcotics to enter the state more easily than other parts of India. He added that the drug epidemic in Punjab had a strong correlation with rising unemployment among the youth. “Punjab has a high youth unemployment rate at 16.60 percent compared to the national average of 10.20 percent due to a slowdown in agricultural productivity, lack of industrialisation, the mismatch between educational qualifications, etc,” said the release. He requested the Commission to provide Rs 300 crore for expanding and strengthening clinics to rehabilitate patients of drug abuse. Further, the Punjab chief minister urged the Commission to provide Rs 5,500 crore and Rs 6,719 crore to its power infrastructure and road infrastructure, respectively. He also sought Rs 100 crore to strengthen the cancer infrastructure and Rs 505 crore to provide sewerage facilities in the state. The Finance Commission was represented by Chairman N K Singh, members Anoop Singh, Ashok Lahiri and Ramesh Chand.     To keep watching India’s No. 1 English Business News Channel – CNBC-TV18, call your Cable or DTH Operator and ask for the Colors Family Pack (inclusive of 24 channels), available for Rs. 35/- per month, or subscribe to the channel for Rs. 4/- per day. To keep watching the Leader in Global Market & Business News – CNBC-TV18 Prime HD, call your Cable or DTH Operator and ask for the Colors Family HD Pack (inclusive of 25 channels), available for Rs. 50/- per month, or subscribe to the channel for Rs. 1/- per day.