Governor Questions Fiscal Prudence
In a two-page letter addressed to Punjab’s Chief Minister Bhagwant Mann, Governor Banwarilal Purohit has raised concerns over the state’s fiscal management. He emphasized the importance of prudent fiscal policies to effectively manage the state’s financial resources. The governor’s letter highlighted a substantial variation between the feedback from the Comptroller and Auditor General of India (CAG) and the figures provided by the chief minister regarding the state’s additional borrowing and its utilization for purposes other than capital asset creation.
Previous Correspondence
This letter from the governor follows a previous exchange of letters between the two leaders. Chief Minister Bhagwant Mann had informed the governor that his government had added ₹47,107.6 crore to the state’s debt in the past year and a half, with 57% of the borrowed amount being used to meet the interest liability on the state’s legacy debt. Mann, in his reply to the governor’s letter dated September 21, placed the blame for the substantial debt on his predecessor.
Seeking Accountability on Borrowings
Governor Purohit had sought accountability from Chief Minister Mann regarding the utilization of ₹50,000 crore in debt raised by the government over the past one-and-a-half years. This exchange of letters is the latest episode in the ongoing disagreements and tensions between the governor and the chief minister on various issues.
Key Concerns
In his latest communication, Governor Purohit expressed concerns about the state’s additional borrowing. In the fiscal year 2022-23, the state government borrowed ₹33,886 crore, surpassing the approved amount of ₹23,835 crore by over ₹10,000 crore, as originally approved by the state assembly in the budget. The governor raised questions about the purpose of this additional borrowing, as it appeared that it had not been used for the creation of capital assets. This was evident from the effective capital expenditure, which had dropped by over ₹1,500 crore from the projected ₹11,375.59 crore to ₹9,691.53 crore.
Urging Fiscal Prudence
Governor Purohit advised Chief Minister Mann that borrowing should ideally be leveraged for creating capital assets rather than rolling out populist measures. He emphasized the importance of fiscal discipline, resource mobilization, and curbing pilferages for comprehensive welfare measures. The governor also cited concerns about power theft and electricity losses in the state and suggested that such issues should be addressed to avoid pilferage of public funds.
Concerns Over Government’s Performance
The governor expressed concern over the government’s performance and urged honest efforts to restore Punjab’s fiscal health. He emphasized the need for efficient governance and fiscal prudence to ensure the welfare of the state. The governor assured Chief Minister Mann that they could approach the Government of India for assistance to address the state’s financial challenges.
Chief Minister’s Request
In his response to Governor Purohit’s letter, Chief Minister Mann had requested the governor’s assistance in convincing the Prime Minister to release the rural development fund (RDF) and provide a moratorium on debt repayment for the state, extending up to five years.