Punjab govt not managing fiscal resources efficiently: Governor writes to CM Mann

PTI, Oct 17, 2023, 5:44 PM IST

Punjab Governor Banwarilal Purohit has accused Chief Minister Bhagwant Mann of not managing the state’s fiscal resources efficiently, as the tussle between the CM and the Raj Bhavan continued.

Replyng to a letter from Mann on the state’s debt burden, the governor wrote the state is expected to follow prudent fiscal policies to manage its scarce financial resources. ”However, according to the information available, the state government is not managing its fiscal resources in an effective and efficient manner,” the governor wrote. Purohit also alleged “substantial variation” in the figures furnished by the chief minister in comparison to the figures of the Comptroller and Auditor General (CAG) of India on the debt position.

According to the governor’s letter, the state government provided a figure of Rs 47,107 crore as an increase in debt while according to the CAG, it was Rs 49,961 crore from April 1, 2022 to August 31, 2023.

Noting that the performance of the government is causing concern on the fiscal front, the governor asked for clarification for “diverting capital receipts for other undisclosed purposes”.

He also advised borrowings should ideally be leveraged for creation of capital assets and not for rolling out populist measures. All public borrowings should be carefully calibrated so that the youth of Punjab are not imperiled by unsustainable debt, he said.

The governor wrote back after the chief minister on October 3 had pointed out that a “mammoth” amount was spent on repaying interest on borrowings which were inherited.

The Mann-led AAP dispensation has been at loggerheads with the Raj Bhavan on several issues in the past.

Purohit also questioned raising Rs 10,000 crore more debt than what was approved by the state Assembly in the budget.

In 2022-23, the state government borrowed Rs 33,886 crore, as against the approved amount of Rs 23,835 crore, the governor said.

“This additional borrowing needs to be explained as, apparently, it has not been utilised for creation of capital assets,” said Purohit.

“This is evident from the fact that the effective capital expenditure dropped by over Rs 1,500 crore – from a projected Rs 11,375.59 crore to Rs 9,691.53 crore. Further, the additional borrowing was not even used to discharge legacy interest obligations, according to the figures projected in the revised estimates in this regard,” Purohit said.

These demonstrate that the total payments defrayed on this account during the year finally stood at Rs 19,905 crore, as against a projection of Rs 20,100 crore in the budgetary estimates for 2022-23, he said.

The governor also alleged “substantial variation” in the figures furnished by the CM. “CAG points out to an increase in debt by Rs 49,941 crore and capital expenditure of mere Rs 7,831 crore against Rs 10,208 crore projected in your letter.

During this year, the projected levels of capital expenditure have reached only 12 per cent so far, causing concern that this year too, the state will fall short of its capital expenditure targets,” said the governor.

Purohit said he agrees that welfare measures should be implemented comprehensively. At the same time, he said financial prudence demands that such welfare measures should be accompanied by fiscal discipline, resource mobilisation by curbing pilferages, cutting down on unproductive expenditure and shunning fiscal profligacy.

He also cited the example of technical and commercial losses of Punjab’s power utilities, saying it needs significant reduction.

“Otherwise, this only means that we are actually subsidising large scale theft of electricity by unscrupulous elements… such electricity theft must be curbed, and the resultant savings should be utilised to subsidise the weaker sections of the society,” said Purohit.

“Can I get the accurate figures along with reasons for diverting capital receipts for other undisclosed purposes which may please be clarified? I am asking this question for the sake of transparency.

I assure you once such a comprehensive picture is available, we can approach the Centre for appropriate assistance as the prime minister has always expressed his commitment for Punjab,” said Purohit.