Tuesday, August 7

Politics Over Economics

Punjab, headings towards bankruptcy, deserves better governance, according to an editorial in The Tribune
That Punjab has been in a financial mess is known. But few, perhaps, expected the deterioration so fast and so soon. Media reports indicate the government has stopped making payments of TA/DA bills and discontinued provident fund withdrawals. Only salaries of employees are paid. Next year the government requires an additional sum of Rs 1,500 crore to implement the pay commission’s interim report. The crisis has deepened due to a 30-per cent decline in stamp duty collections and a 20-per cent fall in small savings. So common is tax evasion that one MNC pays more tax to the government than the entire industry in Ludhiana.
The successive governments in Punjab have survived on borrowed money. The last Badal government had left behind Rs 32,000 crore as debt. The Amarinder Singh government too borrowed heavily and pushed the state debt to Rs 53,000 crore. Having done that, it is not proper for Captain Amarinder Singh to point the accusing finger at the Badal government. Taxes are opposed, but few understand and object to loans. Besides, competitive populism has driven successive governments in Punjab to avoid imposing fresh taxes or user-charges on utilities. Instead, power and water are supplied free to a large section of society. Now the ‘dal-wheat’ scheme will cost the exchequer Rs 527 crore. Politics prevails over economics.
Some hard decisions are required which the Badal government, given its reputation for freebies, is unlikely to take. It should scrap the post of parliamentary secretary, cut down the strength of IAS/IPS officers to the sanctioned number, wind up or sell off all loss-making state enterprises, limit official trips abroad and slash VIP security. Effective governance is the main requisite. A smaller state like Haryana has a higher revenue collection than Punjab. If ongoing projects are held up on flimsy grounds and the Dera issue is allowed to vitiate the peaceful environment, why would anyone invest in Punjab?

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