Fix Punjab’s finances
PUNJAB’s appointment of Arbind Modi, a seasoned former IRS officer, as Chief Adviser on Fiscal Affairs, along with Sebastian James from Duke University, signifies the state government's recognition of its pressing economic challenges. The two advisors are entrusted with literally bringing back the state from the brink. They will be required to tackle Punjab's entrenched fiscal troubles, including soaring debt, inadequate capital expenditure and the struggle to fulfil basic financial obligations. Their mandate to mobilise resources, rationalise spending and reconfigure fiscal debt is, indeed, ambitious.
Punjab's fiscal health is alarming: the state has found it increasingly difficult to fund essential services, with a significant portion of its revenue going towards repaying debt and servicing loans. Despite attempts to boost revenue —such as increased VAT on fuel, higher property registration fees and raised bus fares — the state remains financially strained. A recent request for an additional borrowing limit of Rs 10,000 crore from the Centre underlines the dire straits. The Centre's delay in releasing critical funds under schemes like the Rural Development Fund and National Health Mission has exacerbated the fiscal crisis.
Reviving Punjab's economy will require more than technical expertise; it will demand political acumen and innovative strategies to engage with the Centre on crucial financial support. While Punjab's recent fiscal prudence is commendable, the challenge lies in translating internal revenue efforts into sustainable development without overburdening taxpayers or cutting essential services. The task ahead is arduous for the advisers. Plus, if the fiscal recovery starts happening at this stage when the AAP government is in the middle of its term in the state, it gives the party greater heft to face the electorate the next time. After the drubbing in the recent Haryana poll, Arvind Kejriwal had pointed out the folly of being overconfident. Let’s see if this course-correction pays.
