MANPREET BADAL on Punjab's financial crisis: A Wild, Sorry Thing
D. H. Lawrence once wrote scathingly about people’s refusal to admit their faults as their worst weakness: “We refuse to acknowledge the passionate evil is in us. This makes us secret and rotten.” The fact that Punjab’s finances are rotten today is primarily attributable to the refusal by successive governments to admit that the state is headed towards a fiscal disaster. For Punjab’s fiscal misery hasn’t come upon it suddenly. To use a rough analogy, much like global warming, the signs of trouble made themselves manifest more than two decades ago. The evidence was starker with each passing year, but the state’s government chose to be foolishly ignorant and criminally callous about it.
Shortly after the apocalyptic year of 1984, Punjab ceased to be a revenue surplus state. By the time the state got around to vanquishing terrorism (early 1990s), it had the highest deficit for any state in India. By the mid-’90s, Punjab’s debt ratio to GDP had crossed five per cent—almost twice the national average. One would have imagined that this would have forced some corrective action. On the contrary, within two years, debt ratio was hovering at over 7 per cent of the GDP. And then came the biggest ignominy of them all—debt! The former prima donna amongst the Indian provinces was to flirt with debt and was doomed to be perpetually indebted. In the fiscal year 1998-99, there were only 10 days when the state had a positive cash balance. There were ominous signs of delays in salaries, reprimands from the Centre, but in a false sense of bravado and misplaced confidence, all caution was thrown to the winds.
In the decade that followed, Punjab was to breach all the limits of fiscal recklessness. Today, the state is faced with a monstrous outstanding debt of Rs 1,02,282 crore. But even in its hour of ignominy, the Punjab government lacks humility. A month ago, when the government delayed paying salaries, pensions and other allowances to employees and was forced to mortgage some of its properties to generate immediate liquidity, the deputy CM and state finance minister told the media that all developed nations, provinces and top corporates have debts. Their axiom was that high debt was in a way indicative that the state was doing well. However, what they conveniently forgot to mention was that Punjab’s debt isn’t being used for any productive purposes. The inconvenient truth: 80 per cent of its loans goes towards debt servicing!
There is no point evading culpability. I for one would openly admit that it is my generation, people and politicians who have been at the helm of affairs for the better part of the ’90s and noughties, who have brought Punjab to this precipice. Sadly, those who show enough gumption to admit that they are wrong are quickly dismissed as doubting cassandras. Or worse, they are termed “unconscionable capitalists” opposed to public welfare.
That the so-called welfare schemes, launched with much pomp, rarely reach their beneficiaries is altogether a different matter. They know that sound welfare measures presuppose a financially stable state. Unlike Tamil Nadu, which is now extending the idli-sambar scheme to provide clean potable water, Punjab’s penury ensures that the government’s atta-dal scheme is a no-go. It’s abruptly discontinued for months and, when started, no arrears are provided. Farmers would rather pay for electricity, if in the name of free electricity they get 4-5 hours supply. They realise the pointlessness of announcing new schools, for they know an indebted government hasn’t filled the 35,000 vacancies in the education department.
Meanwhile, as the state’s plutocracy continues to spend unchecked by gifting themselves fancy sedans, foreign junkets, security retinues etc, the common people struggle to keep the wolves of inflation and public debt out of their door. On the rare occasion that their politicians do talk to them, they blame the usual suspects—Punjab’s terrorism decade, Punjab being landlocked, Punjab’s proximity to Himachal (which enjoyed special status), Punjab’s hostile border with Pakistan and the Centre’s apathy.
But the common man of Punjab is aware of the disingenuousness of all this. He knows terrorism was over two decades ago, that there are states that grapple with Naxalism and still grow at 9 per cent. He knows that there are 20 states in India that are landlocked, that Gujarat too has a hostile border with Pakistan. They know Haryana prospers despite contiguity to states with special status. Most importantly, they know that self-pity is never the starting point of reform. Or as Lawrence puts it, “I never saw a wild thing feel sorry for itself.” Unfortunately, their politicians don’t feel the same shame
http://www.outlookindia.com/article.aspx?288402
Shortly after the apocalyptic year of 1984, Punjab ceased to be a revenue surplus state. By the time the state got around to vanquishing terrorism (early 1990s), it had the highest deficit for any state in India. By the mid-’90s, Punjab’s debt ratio to GDP had crossed five per cent—almost twice the national average. One would have imagined that this would have forced some corrective action. On the contrary, within two years, debt ratio was hovering at over 7 per cent of the GDP. And then came the biggest ignominy of them all—debt! The former prima donna amongst the Indian provinces was to flirt with debt and was doomed to be perpetually indebted. In the fiscal year 1998-99, there were only 10 days when the state had a positive cash balance. There were ominous signs of delays in salaries, reprimands from the Centre, but in a false sense of bravado and misplaced confidence, all caution was thrown to the winds.
In the decade that followed, Punjab was to breach all the limits of fiscal recklessness. Today, the state is faced with a monstrous outstanding debt of Rs 1,02,282 crore. But even in its hour of ignominy, the Punjab government lacks humility. A month ago, when the government delayed paying salaries, pensions and other allowances to employees and was forced to mortgage some of its properties to generate immediate liquidity, the deputy CM and state finance minister told the media that all developed nations, provinces and top corporates have debts. Their axiom was that high debt was in a way indicative that the state was doing well. However, what they conveniently forgot to mention was that Punjab’s debt isn’t being used for any productive purposes. The inconvenient truth: 80 per cent of its loans goes towards debt servicing!
There is no point evading culpability. I for one would openly admit that it is my generation, people and politicians who have been at the helm of affairs for the better part of the ’90s and noughties, who have brought Punjab to this precipice. Sadly, those who show enough gumption to admit that they are wrong are quickly dismissed as doubting cassandras. Or worse, they are termed “unconscionable capitalists” opposed to public welfare.
That the so-called welfare schemes, launched with much pomp, rarely reach their beneficiaries is altogether a different matter. They know that sound welfare measures presuppose a financially stable state. Unlike Tamil Nadu, which is now extending the idli-sambar scheme to provide clean potable water, Punjab’s penury ensures that the government’s atta-dal scheme is a no-go. It’s abruptly discontinued for months and, when started, no arrears are provided. Farmers would rather pay for electricity, if in the name of free electricity they get 4-5 hours supply. They realise the pointlessness of announcing new schools, for they know an indebted government hasn’t filled the 35,000 vacancies in the education department.
Meanwhile, as the state’s plutocracy continues to spend unchecked by gifting themselves fancy sedans, foreign junkets, security retinues etc, the common people struggle to keep the wolves of inflation and public debt out of their door. On the rare occasion that their politicians do talk to them, they blame the usual suspects—Punjab’s terrorism decade, Punjab being landlocked, Punjab’s proximity to Himachal (which enjoyed special status), Punjab’s hostile border with Pakistan and the Centre’s apathy.
But the common man of Punjab is aware of the disingenuousness of all this. He knows terrorism was over two decades ago, that there are states that grapple with Naxalism and still grow at 9 per cent. He knows that there are 20 states in India that are landlocked, that Gujarat too has a hostile border with Pakistan. They know Haryana prospers despite contiguity to states with special status. Most importantly, they know that self-pity is never the starting point of reform. Or as Lawrence puts it, “I never saw a wild thing feel sorry for itself.” Unfortunately, their politicians don’t feel the same shame
http://www.outlookindia.com/article.aspx?288402
