Debt Accumulation Story of Punjab
Punjab’s Finance Minister Harpal Cheema predicted that Punjab’s debt will reach Rs 3.74 lakh crore by the end of the 2024–25 fiscal year, or more than 46% of the state’s total gross domestic product (GDP) of over Rs 8 lakh crore.
Punjab current news: The finance minister had informed the legislature that borrowings and loans would amount to more than Rs 41,000 crore in 2024 alone.
Based on these figures, divided by the approximately three crore people living in the state, every Punjabi person is expected to have a debt of almost Rs 1.24 lakh.
Chief Minister Bhagwant Mann requested money worth Rs 1.32 lakh crore to encourage development in Punjab on July 22 during a meeting with members of the finance commission.
This included development funds of Rs 75,000 crore
- Rs 17,950 crore for agriculture and paddy diversification
- Rs 5,025 crore for stubble-burning
- Rs 8,846 crore for combating drug abuse and narcoterrorism
- Rs 6,000 crore for industry revitalisation
In addition, he requested Rs. 10,000 crores for rural local bodies and Rs. 9,426 crores for urban local bodies.
“Why would they (finance commission) provide financial support to a government that wastes money by giving away free things?” questioned Dr. Pramod Kumar, the director of Chandigarh’s Institute for Development and Communication (IDC).
Punjab argues that the state has been improving its revenue collection over time, which supports its request for an assistance package. “In the past two years, the AAP had worked for impressive growth, which even surpassed national growth rates,” the chief minister struggled to explain to the commission members.
He said that excise revenue alone had increased by more than 50% and that revenue from the goods and services tax (GST) had increased by 33%. Mann said that this had been made possible by responsible governance and strong administration.
Punjab’s finance minister on the financial condition of the state
Punjab finance minister, Cheema had stated in February of this year that the economy of Punjab was heading in the “right direction” because during the first ten months of the fiscalyear 2023–24 revenue from taxes like value added tax (VAT), excise, and GST had surpassed 30,000 crores. Excise revenue had increased by 10%and GST income by 15.67 percentrespectively, in comparison to the previous fiscal year.
According to the finance minister, there was a net revenue rise of Rs 2,351 crore from GST and Rs 669 crore from excise. He continued, “In the meantime, the state also records increases in central sales tax of 28.14 percent, VAT of 10.89 percent, and Punjab state development tax of 5.53 percent.
Notwithstanding these initiatives, economists warn that populist expenditures, subsidies, freebies, doles, and continuously increasing salary and pension costs will leave little money for the state’s development.
Punjab on the verge of facing a financial crisis
breaking news Punjab: Punjab is about to experience a financial crisis, thanks to free power for Rs 20,200 crore and free travel for women worth Rs 700 crore. Following the outcome of the Lok Sabha election, the state finance department recently raised concerns about this matter at a review meeting headed over by Chief Minister Bhagwant Mann.
The state may struggle to pay salaries and the cost of the electricity subsidy if immediate action is not done, as the Centre is not supporting the state, according to a presentation made by the financial department.
Existence of freebies culture
In any case, the freebies are entirely funded by tax payers. It is not personal money. On the contrary Parties are free to promise things and to fulfil them “for the welfare of the people.”
The issue of “irrational freebies” has now reached the Supreme Court, where Arvind Kejriwal’s AAP argues that freebies programs must go on since they are for the benefit of the public welfare, in opposition to the BJP-led federal government’s desire for them to end.
People are unable to arrange for themselves the provision of several services, including health, education, transportation, water, sewage, and energy. They elect governments for this reason. All of these are welfare initiatives. The amount of money the government has to give away for these services will depend on government’s fiscal space. Offer free services in excess of what you are comfortable with if your expenditure-revenue ratio is strong. But in actuality, financial shortages frequently affect every state.
Parties have frequently turned to the freebie culture as a cover for their governments’ inability to skill up the workforce, provide enough jobs, or guarantee a respectable standard of living for citizens through sound economic policy.
Surpassing all predictions, the Aam Aadmi Party in Delhi won power in 2015 with the promise of free water and electricity (within certain bounds). Even in 2013, when AAP leader Arvind Kejriwal took office for the first time (for 49 days), he did so by publicly burning pending utility bills and forgiving debts.
The Election Commission published recommendations in 2014 that stated that promises that could be fulfilled should be the only basis for gaining the trust of voters. However, additional authority is needed for the Election Commission to guarantee that its rules are followed.
