Centre warns Punjab against raising funds via assets, future revenue

Ruchika M Khanna

Chandigarh, July 24

The previous governments have not only mortgaged several assets of the state to raise loans, but have even pledged the future income to raise resources. This has put the state in a position where its financial stability is at a risk.

From the Punjab Mandi Board (PMB) to the Punjab Infrastructure Development Board — the once cash-rich instituitions of the state have been “milked dry” — as their future fund accruals have been pledged to raise more loans. It is learnt that in the past two years alone, during the Congress regime, Rs 2,879 crore was raised by the state by escrowing future revenue.

The issue was reportedly flagged in the recently held meeting of all Chief Secretaries in the presence of PM Narendra Modi.

Information gathered by The Tribune shows that while the then SAD-BJP government (2012-17) had raised a loan of Rs 3,134 crore to fund its Urban Rural Mission Scheme, it pledged approximately Rs 1,200 crore of its annual income for 10 years, beginning 2015-16, for repaying the debt. Initially, the then government was sanctioned a loan of Rs 5,000 crore, but only Rs 3,134 crore was released by a consortium of banks.

The Congress, after it took over, also took the same route and pledged the future fund accruals of the PMB for 10 years when it raised a loan of Rs 4,000 crore to fund the Crop Loan Waiver Scheme. Every six months, the board now has to shell out Rs 625 crore from its earnings towards loan repayment and interest.

Besides this, the governments have also been mortgaging the state’s properties to raise loans. The Tribune has been highlighting the issue for past several years. In a report of the Comptroller and Auditor General, Punjab, released last month, it was pointed out that the Punjab Urban Planning and Development Authority had mortgaged several properties in order to raise resources. The report says after analysing the income and expenditure of the Optimum Utilisation of the Vacant Government Land Scheme (OUVGL), they found that there was a debt balance of Rs 1,158.63 crore. This was met by raising loans against mortgaging OUVGL properties.

Notably, Punjab is among the most debt-stressed states in the country, with its arrears set to cross Rs 3 lakh crore by the end of this fiscal. In wake of the crisis in Sri Lanka, the Centre has asked all many states, including Punjab, not to go in for off-Budget borrowings.

PUNJAB 3RD IN OFF-BUDGET LOAN LIST

Punjab has been placed third after Andhra Pradesh and Uttar Pradesh on the issue of mortgaging the government assets and raising loans by escrowing future revenue of the state.

AAP GOVT TRYING TO UNDO DAMAGE

Previous govts haven’t only borrowed recklessly to fund targeted schemes, but also pledged state’s future. The AAP is realising the scale of fiscal mismanagement. We’re trying to undo the damage. Harpal Cheema, FM