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Financial crisis grips
Punjab
Tribune
News Service
CHANDIGARH, Dec 10 — Punjab has
been hit by a serious financial crisis with the
Reserve Bank of India asking all banks not to
honour any cheque issued by the State.
The treasury transactions stopped since midnight
of the night intervening December 9 and 10.
It is, perhaps, for the first time in history
that Punjab has faced such a piquant situation
when its overdraft continued for more than 10
days, the usual norm fixed by the RBI. The
overdraft, as of now, is Rs 480 crore.
Though the Chief Minister, Mr Parkash Singh
Badal, had taken up the matter with the Prime
Minister almost a week ago, there has been no
response from the Centre, so far. Despite the
Chief Minister having mentioned about the
proposed "structural reforms" to bring
about financial discipline, no tangible results
are visible.
So much so that even a meeting with the Planning
Commission scheduled for discussing the Annual
Plan had to be postponed because the State has no
resources of its own. The current year's
shortfall itself is likely to be Rs 1,000 crore
against an outlay of Rs 2,500 crore. |
Reasons for
crisis
According
to financial experts, the following are
the noticeable features which have led to
the fiscal decline and subsequent crisis
Punjab faces at present:
- A
slow down in infrastructural
development;
- Excessive
dependence on direct government
investment for capital formation;
- Heavy
and increasing direct and
indirect subsidies, including
concealed subsidies to many
sectors;
- Falling
rate of growth of tax and non-tax
revenues;
- Abolition
of important local taxes;
- Centralisation
of administrative controls at
state level to fiscal detriment
of local bodies in urban and
rural areas; and
- Proliferation
of man power.
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Though the State Finance
Minister, Capt Kanwaljit Singh, denies there is
"panic", the facts are contrary to the claim.
All senior officials of the Finance Department were
sitting in their offices late tonight, pouring over data
on "ways and means" balance. The resource
mobilisation of the State has also been tardy.
Meanwhile, the sources
maintained that much of the present problem has accrued
because of overspending by all institutions of the
government, ranging from the Raj Bhavan to the High Court
to the legislature, Council of Ministers, bureaucracy and
general secretariat administration.
Meanwhile, the Punjab
Finance Minister, said today that the Government was
determined to restore financial discipline and introduce
steps to ensure austerity in spending.
Talking to newsmen, Capt
Kanwaljit Singh, said "unanimously and
voluntarily", the Council of Ministers had decided,
as a "demonstrative action", to impose a cut on
their telephone and petrol, oil and lubricants bills.
Moreover, all ministers would stay put in Chandigarh for
at least four days in a week. They would not claim any
allowances for these days.
A scheme for better tax
realisation was also on the anvil. Sales tax assesses
would also get some relief in respect of disputed cases
pending since long. The same would be disposed of if an
assessee paid Rs 100 for every Rs 1 lakh in dispute.
The government was keen on
"private participation" in development works,
including infrastructure and civic amenities.
A report, Capt Kanwaljit
Singh said, by a committee of officers had been received
on financial management. A Cabinet sub-committee of three
members — Mr Mahesh Inder Singh Grewal, Mr Madan
Mohan Mittal and he himself — had been constituted
to study the same and prepare an "action plan"
within a week. "The officers' report, as such, was
not of significance. The action plan will be", he
added.
He parried all questions
on what recommendations for reforms the report contained.
But he did say that the intention was to
"downsize" the government, "lessen"
government indulgence in peoples' day-to-day life,
"redefine" the role of the government make it
(government) a "promoter" not an
"operator", and "withdraw" it from
commercial activities.
The bureaucratic powers
had also to be "shackled" and a
"decentralised, responsive" administration
given to the people through application of "modern
management" practices and to also "cut-down on
inefficiencies".
The report, he said,
envisaged shoring up Rs 1,864 crore through adoption of
the suggested measures and another Rs 2000 crore by way
of private investment.
Capt Kanwaljit Singh
disclosed that he favoured an all-party approach and a
consensus on major economic issues, involving the
country, so that the common man did not suffer.
A "credible and
mature" partnership between the private sector and
the government, thus, was welcome, he added.
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