Crippling debt trap Punjab, HP can take a cue from Haryana

The AAP government in Punjab has been waging a war on drugs as well as corruption, but it hasn’t put up a strong fight against fiscal indiscipline. Successive governments in the state have been living beyond their means, and the current dispensation is continuing in the same vein as if there is no tomorrow. Punjab is the second-most indebted state (after Arunachal Pradesh) in the country in terms of the debt-to-GSDP (gross state domestic product) ratio. There is nothing surprising or shocking about this dubious distinction. The state finished last among 18 major states on the NITI Aayog’s Fiscal Health Index just two months ago. A similarly grim picture was painted by the Comptroller and Auditor General’s audit report in September last year — the state’s expenditure has been consistently outpacing its revenue receipts. Things have come to such a pass that fresh loans are being taken not only to repay previous ones but also to meet routine expenses. AAP never tires of blaming the Akali-BJP and Congress governments for the crippling debt burden, but it has added to the mess by offering subsidies and freebies without bothering about the state exchequer’s precarious position. It’s obvious that tough, unpopular decisions have to be taken. Having antagonised the farming community by evicting protesters from Shambhu and Khanauri borders, will AAP go on to withdraw or rationalise free electricity for farmers? And will it also discontinue the freebie being given to domestic power consumers? However, electoral compulsions may prevent the ruling party from taking such drastic steps, even though they may be beneficial for Punjab in the long run. Neighbouring Himachal Pradesh is also facing a financial crisis, despite conscious efforts by the Congress government to tighten its belt. Revenue from the tourism, hydropower and agriculture sectors has been dwarfed by mega borrowings to fund infrastructure projects. Arresting the alarming slide should be a top priority for both Punjab and HP, which can take a cue from Haryana’s reasonably good model to manage debt and generate revenue.