Punjab seeks "loan" from PSUs
By P.P.S. Gill
Tribune News Service

CHANDIGARH, Dec 19 — The political developments in Punjab have overtaken other important issues, announcement of the promised "action plan" on financial strategy being one of them.

This "action plan" was to be a corollary of the report of a committee of officers, who had delineated steps to curtail expenditure, observe financial discipline, restructure the administration and overhaul the public and cooperative sectors.

A three-member Cabinet sub-committee, as the Finance Minister, Capt Kanwaljit Singh, had said on December 10, was to submit its report by December 17 as to how the 11 recommendations on the proposed reforms were to be implemented, both in short as well as in the long term.

Since one of the members of the committee, Mr Mahesh Inder Singh Grewal, has resigned as a sequel to the one-going feud between the Chief Minister, Mr Parkash Singh Badal, and the SGPC President, Mr Gurcharan Singh Tohra, the task of providing "substance" to the draft "action plan" is now being handled by the officers concerned. The committee has not been reconstituted.

As part of that exercise, the Chief Secretary has held a meeting with some of the public and cooperative sector representatives to discuss "fund management" in the organisations to meet its day-to-day financial requirements, the government wants these organisations to make available "surplus" money with them to the State on the basis of payment of interest in return.

In other words, the Government, being in financial strait and having faced embarrassment in recent weeks due to a hefty overdraft of Rs 480 crore, is now desperately trying to convince the departments, boards and corporations to lend money to it on "loan" rather than keeping it with the banks.

That such a proposition is being worked out is seemingly odd when as per the admission of the Finance Department the mounting losses of 75 public sector undertakings are already causing a loss of Rs 1,100 crore, annually, to the State. The increasing expenditure by all institutions of the State is a worrisome feature. The meeting on fund management in public sector and cooperative institutions on Friday was attended by the Rural Development Board, Markfed, Punjab Mandi Board, PSIEC, PSEB, (School Education Board), PUDA, etc. At that meeting it was questioned whether the government could take such a loan as a short-term measure on 12 per cent to 14 per cent rate of interest.

So precarious is the financial situation of the State that fresh instructions have been issued to all treasuries that "no" payments are to be released. All payments are ordered to be "staggered". The watchword is "go slow". The only bills the treasuries will, henceforth, clear will be in respect of "salaries, pensions, general provident fund and leave travel concession". The next three months will be crucial because the financial year closes on March 31. The only ray of hope with the Finance Department is that the state's Excise and Taxation Department will come to its rescue.

But the revenue returns of that department are not very encouraging, though, some improvement has been noticed which may give a brief reprieve to the financial managers. In fact, for much of the failings of the taxation wing of the state, the blame is being apportioned to "political impediments", which were cogently spelled out by the Financial Commission, Excise and Taxation, at a meeting chaired by the Chief Secretary, recently.

The business and trade has become so used to "unyoked" regime that any attempt to recover taxes is construed as "harassment". The abolition of sales tax forms XXII and XXII-A way back when the late Mr Beant Singh was the Chief Minister and also doing away with the tax barriers has also added to the present impasse. The "bogus" transactions between two registered dealers has also added to the shortfall in recoveries. Basically, it is the "system" which requires to be remedied, remarked the officers who attended the meeting.

In fact a committee, headed by Mr Y.S. Ratra, is believed to have formalised certain proposals on "revamping the system." In the report of the officers' committee the last recommendation on reforms pertains precisely to this issue as to how tax regime can be resuscitated to ensure "buoyancy" of revenues and "compliance" of laws. The string of "concessions" announced by the SAD-BJP government to business and trade has added to the woes of the Finance Department.

The Finance Department openly admits that "the real per capita income of Punjab is lower than the per capita debt of the state government". Punjab also has the lowest tax realisation rate among all northern India states. There is increasing reliance of the state on borrowings for meeting even its current expenditure, such as establishment and maintenance, which is contrary to the canons of fiscal propriety.

Despite the political crisis, the Chief Minister is reported to have been in touch with the latest financial position and the Finance Minister wants stringent measures to save every penny so that the State does not go into yet another overdraft, which seems imminent. A source said "the situation is still grim, financially".