Chandigarh, December 9
The pre-election sops announced by the Hooda government during its last tenure and implications of the Sixth Pay Commission recommendations have turned the cash-surplus state of Haryana into a cash-strapped state.

Over the past two years, market borrowings of the state have zoomed - thanks to huge sops in the name of various pensions and scholarships, amounting to around Rs 750 crore, announced by the Hooda government over and above the budgetary provisions for this fiscal.

With the state also having to bear implications of the pay commission recommendations, the state’s finances have hit a new low. The state has to pay Rs 5,600 crore as arrears of salary and pension to its employees, besides having to bear the annual liability of Rs 2,000 crore.

Over the past two years (2008 onwards), Haryana has shown growing dependence on market borrowings to manage its finances. This, even as good fiscal management practices adopted earlier had ensured that the state did not have to raise any money for two consecutive years, 2006-07 and 2007-08.

Last fiscal (2008-09), the state borrowed Rs 2,795 crore, as against a limit of Rs 3,797 crore allowed by the Planning Commission. This year, even as the third quarter has not yet ended, the state has already raised Rs 2,900 crore through auction of its state development loans. Of this, securities worth Rs 1,000 crore were auctioned by the Reserve Bank of India in Mumbai yesterday.

Because of the economic slowdown, the Planning Commission had raised the borrowing limit from 3.5 per cent of the state gross domestic product (SGDP) to four per cent this year, officials in the Finance Department said. As a result, Haryana can borrow Rs 5,670 crore, through auction of its state development loans and by borrowing it from the World Bank, the NCR Planning Board and NABARD. Of Rs 5,670 crore, a limit of Rs 3,900 crore has been set by the Planning Commission for borrowing from the market.

Sources in the Finance Department admit that the state is going through a financial crunch. “This fiscal, the total deficit is expected to be around Rs 3,000 crore against the expenditure of Rs 35,000 crore. Though the economy is showing some signs of recovery, with VAT and excise collections now going up, we have been forced to adopt some economy measures like ban on purchase of new furniture and cars and impose curbs on official travel by business class,” they said.

The state has now decided not to release in one go the entire arrears to the government employees on account of implementation of the pay commission recommendations. While employees got 40 per cent of the arrears in February this year, they will get 30 per cent in February, 2010, and the balance 30 per cent in February, 2011.