An account on the rising debt on Punjab

Punjab has gone from being “debt-stressed” to being “debt-trapped.” The ruling Aam Aadmi Party party, which came to power promising “Badlav,” has fallen into the trap of distributing sops to people despite empty coffers, despite the fact that the government has managed to pay its committed liabilities up to this point.The government borrowed $13,940.15 crores from April to October. It is known that the government borrowed an additional 4,000 crores in November and December. 8,795 crores of money have also been used to pay off previous debt and interest. The state owed 2.83 lakh crore in unpaid debt as of March of current year.

Three significant freebies—300 free units of electricity, a $1,000 allowance for each woman, and the regularisation of jobs for contract and ad hoc workers—helped the Aam Aadmi Party win the election. Even the 300 free electricity units provided to domestic houses have reduced the state’s revenue; this year, the cost of power subsidies is expected to exceed 20,000 crores.AAP brought up the issue of previous administrations misusing funds and investing in PSUs that were losing money. The AAP administration had pledged to sell its holdings in boards and corporations of loss-making PSUs and had sought to consolidate and dissolve some of the 46 organisations. Little has been done in this direction thus far.

AAP didn’t implement any new tactics because they depended on populism to win the state election. Additionally, the government pledged to raise 20,000 through the sale of gravel and sand. But intriguingly, sand mining is prohibited in the state. In a similar vein, it appears improbable that the government would reach its goal of collecting 9,647 crores.
Although the state’s financial indicators indicate that it has achieved a lower level of designated excise income this year than it did in 2021, real excise collections have increased by 33.44 percent (from 3,984.06 crores in April to November 2021-22 to 5,316.45 crores in the same period this year).

When compared to the same period in 2021, the state’s VAT collection performance between April and November this year was significantly weaker than it was the previous year, coming in at close to 22.77 percent. Additionally, the state government will lose 16,000 crores in revenue because the GST compensation has been paid out. According to Finance Minister Harpal Cheema, the state has done a great job controlling its finances since the AAP took office.