Punjab’s “dependence” on market borrowings is going up. The State Government is using a “sizeable” portion of fresh borrowings for repayments of past debt and “minuscule” part of debt was spent on capital expenditure for asset creation.
The revelations were made in the report by the Comptroller and Auditor General (CAG) of India on the State finances. To bring the State out of this fiscal mess, the CAG has advised the Punjab Government to “give due priority to capital expenditure and utilise the debt receipts for asset creation”.
After analysing State’s public debt management, it has been found that the Punjab Government’s dependence has been increasing on market borrowings every year. “The percentage of market loans to total debt has jumped from 32.71 per cent in 2009-10 to 49.22 per cent in 2013-14, which indicates that dependence of the Government on market loans has been increasing year by year,” stated the CAG report.
The size of market borrowings increased from Rs22,235 crore from 2009-10 to Rs50,318 crore in 2013-14. The total outstanding liabilities of the State was pegged at Rs1,02,234 crore as on March 31, 2014.
CAG pointed that of all the constituents of outstanding liabilities of the Government, the market loans need special attention because interest rates thereon may go up if in the market perception, the Government debt is unsustainable.
On application of borrowings, the Government auditor found that major portion of borrowings was utilised for repayment of earlier debt with percentage of utilisation of borrowings for repayment of past borrowings increasing every year.
As per CAG report, the percentage of utilisation of borrowings for repayment of earlier borrowings went up from 52.52 per cent in 2009-10 to 69.11 per cent in 2013-14. Whereas the percentage of utilisation of borrowings for capital expenditure dropped to 9.11 per cent in 2013-14 from 21.43 per cent in 2009-10, it said.
Out of total borrowings of Rs24,140 crore in 2013-14, Rs16,682 crore were used for repayment of past debt while Rs2,200 crore and Rs5,256 crore were utilised for capital expenditure and revenue expenditure respectively.
The Government auditor further observed that net capital expenditure as percentage to GSDP declined from 1.10 per cent in 2009-10 to 0.69 per cent in 2013-14, which shows that the borrowed funds were used to meet revenue expenditure instead of using it for creation of assets.
CAG further said that the State Government did not make any contribution to the Sinking Fund since inception, saying that had the contribution been made, there would have been consequential impact on revenue expenditure and revenue deficit.
The Punjab Government had constituted a sinking fund for loans raised by it from open market. It had to contribute 0.50 per cent of outstanding liabilities to the fund.
GOVT RAPPED FOR Rs1,518 CR UNPAID BIllS UNDER ‘ATTA-DAl’ SCHEME
The CAG has rapped the Punjab Government for not clearing Rs1,518.83 crore bills to its own State food grain procurement agencies under its ambitious ‘Atta Dal’ scheme aimed at benefiting 15.41 lakh poor families with annual income of less than Rs30,000.
CAG’s report on public sector undertakings found subsidy claim of Rs1,518.83 crore of State procurement agencies, including PUNSUP, PAFCl and PSWC, were left unpaid by the Punjab Government for procurement of wheat and pulses under ‘Atta Dal’ scheme.
Report pointed that because of non-release of funds to PUNSUP, pulses were not procured and distributed during 13 months out of 30 months among beneficiaries, thus defeating the purpose of the scheme.
“To meet the shortfall of finances from the State, procuring agencies diverted Rs1,063.27 crore from cash credit limit for purchase of food grains for central pool. Thus, procuring agencies became bank defaulters due to non-release of differential cost by the State,” report said.
CAG also noticed diversion of wheat, meant for centrally sponsored schemes, towards ‘Atta Dal’ scheme. PUNSUP diverted about 6.36 lakh metric tonne of wheat valuing Rs613.54 crore towards ‘Atta Dal’ scheme, thus violating the Public Distribution System (Control) order 2001, which bars states from diverting food grain allocations under TDPS.
NO DATABASE OF FOOD BUSINESS OPERATORS
Punjab Health Department has no database available regarding the number of food business operators (FBOs) in the State giving rise to the possibility of these operators running business without licenses or registration.
CAG, in its latest report on social, general and economic sectors, noticed that neither was any survey conducted nor was any database with regard to total number of FBOs in the State was available.
Though 10,861 licenses and 85,066 registrations were reported to have been granted up to January 2014, in the absence of the said database, the possibility of FBOs running food business without licenses or registrations could not be ruled out, CAG said.
Health department, in its reply, said that all designated officers were being directed to conduct such survey in the field. CAG also found that department was not maintaining any data in respect of samples collected and analysed in the State. Monthly targets for collection of samples were not achieved and analysis of adulterated samples from referral laboratory was delayed.
It pointed that Food and Drug Authority could not be set up in Punjab for want of release of funds during 2012-14 despite the Government’s decision to make a budget provision of Rs5 crore each year.