Hitting out at the 14th Finance Commission, Punjab Government on Wednesday accused it of doing “grave injustice” to the State by denying the revenue deficit grant.
“The 14th Finance Commission has done grave injustice to Punjab by not giving the revenue deficit grant. The base of their assumption (or denying revenue deficit grant) is against Punjab’s interest,” Punjab Finance Minister Parminder Singh Dhindsa said. He stated that the Commission had not considered its power subsidy as expenditure for working out the grant.
“The only expenditure which was not considered by the commission was our power subsidy. It considers subsidy to industry, but it does not consider subsidy given to farmers,” he said. Further, he questioned why different methodologies were adopted for Punjab in calculating its revenue deficit grant, and also called upon the Centre to address the issue on priority basis.
“The central Government should address the issue because 14th Finance Commission is just a recommending authority,” he said.
Punjab doles out free power subsidy worth Rs 6,000 crore to farmers per annum. The 14th Finance Commission had removed Punjab from the list of states needing revenue deficit grant after recognising the “fiscal turnaround” of the State. SAD-BJP led Punjab government had been demanding revenue deficit grant and Chief Minister Parkash Singh Badal had earlier taken up the issue with Finance Minister Arun Jaitley.
The State had also demanded that it be included in the list of debt-stressed states, enabling it to get revenue deficit grant. After being excluded from the list, the state lost revenue deficit grant of about Rs 3,500 crore.
Addressing media persons, the minister gave indications of taking steps for rationalizing the pay structure of state government employees. He said the new pay commission of the state would be asked to remove the anomalies of the pay structure. Dhindsa, who will be preparing his last budget in the current tenure of the SAD-BJP government, said the Sixth Pay Commission for the state would be constituted once the centre takes a final call on the recommendations of the Seventh Pay Commission.
Favoring parity in pay scales of different states, Dhindsa said that high pay scales of the state needed to be checked and the government this time would try to remove anomalies in pay structure. Clearing the air on the report of next pay commission, Dhindsa said that most likely the report of the pay commission would be out after the assembly elections in the state and the next government might be taking the decision on the recommendations.
Accepting that the salary and pension bills have been one of the biggest challenges to the state, Dhindsa said, “Our salary, pension and retirement benefits bill will touch Rs 28,000 crore this fiscal and it is growing by Rs 3,000-4,000 crore every year. We need to look into this aspect.”
Replying on the extra financial burden due to the hiring of around 1 lakh new employees by the State, Dhindsa said that the sectors like education and health needed workforce and State is facing troubles due to the high pay scales, and it did not mean that we didn’t have to recruit new people.
Claiming to have improved the financial health of the state, Dhindsa said that the state’s fiscal position was even better than neighboring state Haryana.
He said that Punjab was among the few states which have witnessed improvement in finances in last 10 years. Attempting to cut down the allegations of heavy debts on the state, Dhindsa said that the debt on state was 50000 crore during the regime of Congress which had grown to approximately 1.15 lac crore, but if you compare the total GDP of the state, it had shown a better increase than the debt. He claimed that the GDP of the state had grown from 1.27 lac crore to 3.90 lac crore during the tenure of the present regime.
Rejecting the allegations of huge debt, Dhindsa said the state government was able to contain debt successfully. “If you look at debt to GDP ratio, it has come down from 45 per cent to 32 per cent now,”
Answering a query on pending bills of employee salaries and other benefits, Dhindsa said, “When you take steps towards improvement (of fiscal situation), you face some difficulties. If we reduce borrowings then we will have to face financial crunch. We had to face financial crunch for some months after previous central government brought in changes in some policies.”