Chandigarh, March 6
Dissolution of the Punjab Subordinate Services Selection Board (PSSSB), approval to the new excise policy for 2002-2003, raising of the borrowing limit of the PSEB and convening the inaugural session of the 12th Vidhan Sabha from March 20 were among the major decisions taken by the State Council of Ministers at its first meeting here today. The Chief Minister, Capt Amarinder Singh, presided over the meeting.

The Cabinet approved the dissolution of the services selection board by terminating the services of the Chairman and members by giving them one month’s salary in lieu of one month’s notice. However, the present staff assisting the board will continue up to May 30 to deal with residual matters.

The Council of Ministers took stock of the grim financial position being faced by the state. The Principal Secretary, Finance, made a detailed presentation saying that the revenue deficit of the state increased from Rs 480 crore in 1991-92 to Rs 2,335 crore in 2000-2001 and was likely to further increase to over Rs 3,000 crore at the end of 2001-2002.

The government was finding it difficult to even meet expenditure on salaries, pensions, interest and other committed items. During 1998-99, the expenditure on these items was as high as 142 per cent of the total revenues of the state.

With expenditure increasing by about 15 per cent in the past 10 years and receipts being merely 10 per cent per annum, the government had been resorting to incurring heavy debts. The public debt increased from Rs 6,870 crore in 1990-91 to Rs 27,830 crore in 2000-2001. It will further increase to over Rs 32,000 crore at the end of 2002. The interest burden of the state which increased from Rs 360 crore in 1991-92 to Rs 2,812 crore in 2001-2002. The state PSUs also contracted huge debts. As a result, the outstanding guarantees which were just Rs 1,272 crore in 1992 increased to Rs 20,177 crore in 2001-2002.

Due to the financial crisis faced by the PSEB, its functioning has been paralysed. Not only does it have an outstanding institutional debt of Rs 4,396 crore at the end of 2001, it is also saddled with interest liability of over Rs 700 crore per annum on this account alone. Commercial loss of the board increased from Rs 410 crore during 1991-92 to Rs 1,785 crore during 2000-2001.

Bills amounting to Rs 368 crores, including Rs 148 crore for payment to rice millers, Rs 35 crore for the payment to pensioners and Rs 81 crore for grant-in-aid to institutions are yet to be paid. Special ways and means advance amounting to Rs 305 crore availed by the state will have to be paid back before March 31. Therefore, the current overdraft is likely to increase from Rs 168 crore to Rs 1000 crore at the end of the financial year. Due to the financial crisis faced by the state, the government has been resorting to heavy overdraft and has been in an overdraft for as many as 270 days in a year.

The Council of Ministers decided to constitute an empowered cabinet sub-committee on fiscal management under the chairmanship of the Chief Minister. Other members of the committee would be nominated with the approval of Chief Minister. The committee would decide proposals for the restoration of the financial health of the state.

The Central Government may be approached for assistance to tide over the cash crunch and for ensuring the clearance of overdraft with the RBI and for for carrying out the procurement of wheat smoothly.

A White Paper indicating the financial situation may be prepared before the ensuing session of the Punjab Vidhan Sabha for apprising members and the public of the near bankruptcy being faced by the state.

The Council of Ministers also took stock of the financial position of the PSEB. The Secretary Power said cash deficit for the current financial year was Rs 738 crore which would increase to Rs 3000 crore in 2006-07. Similarly, commercial loss (without RE subsidy) of the board for 2001-02 was Rs 1,878 crore which would also go up in the subsequent years.

In case remedial steps were not taken to improve the financial position of the PSEB, it would result in severe power cuts due to the non-arrangement of fuel for power plants and cutting of power supply from the central sector plants, the council was informed. No capacity addition would be possible during the coming years to meet with the ever-increasing power requirement. The PSEB would get into a deeper debt trap, resulting in complete collapse. To overcome the above situation, the board had filed an annual revenue requirement statement with the Punjab State Electricity Regulatory Commission, keeping in view the statutory provision of the Electricity (Supply) Act, 1948, and directions of the Punjab and Haryana High Court to evolve a suitable tariff with a minimum rate of return of 3 per cent.

The Council of Ministers also approved to raise the borrowing limit of the PSEB from the present Rs 5,000 crore to Rs 6,000 crore. With regard to the proposal to implement the tripartite agreement with the Central Government, The RBI and the of Punjab Government for one-time settlement of outstanding dues of the state electricity boards towards the Central Public Sector Undertakings, the council decided to set up a committee under the chairmanship of the Chief Secretary with the Principal Secretary, Finance, and Secretary Power/Chairman PSEB as members to examine the matter in depth.

The Cabinet also approved the excise policy for 2002-03. The present excise policy would continue with minor changes during 2002-2003. There would be a marginal increase of 2 per cent in the number of vends which would be disposed of in open auction. Normal size of group of vends to be put to auction had been retained at Rs 8 crore. Quota of PML had been fixed at 460 lakh proof litres while the quota of IMFL had been fixed at 210 lakh P.L. The rate of excise duty had been retained at Rs 27.50 per P.L. in respect of economy and medium brands and Rs 40 per P.L. for premium and deluxe brands of IMFL. The duty on PML had also been retained at Rs 4 per P.L. However, excise duty on mild beer had been reduced from Rs 12/- to Rs 10 per B.L. Minimum and maximum sale price of beer had been fixed. It would now be available at all liquor vends in the state. In a significant decision, the Cabinet had reduced the additional licensee fee on imported foreign liquor from Rs 60 to Re 1 per P.L., bringing the levies on a par with those applicable on locally manufactured IMFL. Both these measures would significantly reduce retail prices of beer and imported foreign liquor. The licensees would be required to deposit security of 15 per cent of the bid money, 10 per cent at the fall of hammer and 5 per cent by March 27.