Former UPA regime contributed to Punjab's debt problem: Parminder Singh Dhindsa

CHANDIGARH: Punjab Finance Minister Parminder Singh Dhindsa today blamed inflationary pressures and higher interest rate on borrowings during previous UPA government for adversely impacting state's fiscal health.

While concluding the debate on state budget in Punjab Assembly, Dhindsa said that the focus of Punjab Budget 2014-15 was fiscal consolidation by bringing down fiscal as well as revenue deficits and improving revenue mobilisation.

"Previous UPA government contributed a lot in Punjab's debt problem," Dhindsa said in the House.

Rolling out inflation figures, he said that country's inflation rates increased from 9.2 per cent in 2008-09 to 10.2 per cent in 2012-13.

"The impact of inflation not only affects common man but it also affects states' resources," said Dhindsa.

"Because of rise in inflation, the interest rate on borrowings also goes up which directly impacts the state outstanding debt," he said.

Dhindsa said that the average interest rate on borrowings was used to be 6.11 per cent in 2003-04 which had now gone up to a level of 9.13 per cent at present.

"Because of just three per cent increase in interest rate, the state is facing additional financial burden of Rs 3,000 crore per annum," the minister said.

Had previous UPA government taken adequate steps to rein in inflation pressures, the state would not have to bear such a huge financial burden, he said on the floor of the House.

Talking on the issue of state's deficits, Dhindsa who presented third budget on July 16 here in Punjab Assembly, said state government had been able to bring down fiscal deficit as a percentage of GSDP from 3.28 per cent in 2013-14 to 2.58 per cent as per revised estimates.

Acknowledging that revenue deficit was a big problem, Dhindsa said that despite slow revenue growth, state's revenue deficit came down from Rs 7,402 crore in 2012-13 to Rs 5,260 crore.

He said in the budget, revenue deficit has been projected at Rs 4,252 crore for 2014-15.

Dhindsa further admitted that it was not possible for the state government to reduce revenue expenditure as committed liabilities like salary, wages and interest on borrowings was rising every year.

"State's salary bill jumped from Rs 7,687 crore in 2006-07 to Rs 19,740 crore in 2013-14," he said.

On new proposals' Dhindsa said that a plan would be prepared for developing tourism projects in the state in association with financial assistance of World Bank with a project cost of Rs 200 crore.

He further said a sum of Rs 50 crore has been allocated to PSIDC for financing new industrial projects by way of either equity or loan.

On the issue of financial package from Centre, Dhindsa was hopeful of getting package from NDA government. "The Centre will certainly look at our demand of financial package and we will get the same," said Dhindsa.

Punjab Government has been demanding financial package from Centre to bail out the state from its fiscal woes.