Economist dwells on freebies, impact on state’s fiscal health

Tribune News Service

Patiala, March 11

Freebies have derailed the fiscal culture of the state, said an expert during a special lecture on “Punjab in Debt Trap: How to Come Out of It”.

The lecture was jointly organised by Punjabi University Internal Quality Assurance Cell (IQAC), Department of Economics, and the Centre for Development Economics and Innovation Studies (CDEIS).

An eminent economist, Professor Sucha Singh Gill, said the financial health of the state started deteriorating in the mid-80s. The successive governments not only introduced but also intensified the culture of unqualified freebies and unrequired tax removals.

The abolition of octroi, irrigation water charges, sewer bills, water bills across the board; free bus pass facility, free electricity to domestic consumers, free electricity to tube-wells, etc, have derailed the fiscal culture of the state.

According to Professor Gill, the overall debt of the state government had crossed all limits of fiscal tolerance.

Up to March 31, 2022, the outstanding debt of Punjab was 2.85 lakh crore. The present regime has no choice but to procure fresh loans to pay the principal and interest component of the old loans. About 97 per cent of the new loans would be used for this purpose, thereby leaving nothing for capital formation.

The state has to take drastic steps to avoid the situation of “debt explosion”. It has to freeze its overall level of debt so as to contain its expansion.

Even within the existing taxation framework, there is enough scope for more tax collection. The policy of zero tolerance towards tax pilferage has to be adopted.

Subsidies and freebies have to be rationalised. Removal of user charges across the board has to end. The state government must constitute a think-tank involving experts to guide it on policy matters.

Answering questions, Professor Gill said the corporatisation of Indian state would disrupt the social and economic fibre of the country. Those who are leading farmers’ agitation are doing the greatest social service. Universities must articulate the needs of society in an objective manner.

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