Chandigarh: Faced with "burgeoning" debt, Punjab government is all set to seek debt relief through loan restructuring and change in criteria for devolution of funds to states from the 14th Finance Commission tomorrow in order to overcome financial "challenges". "We will seek debt relief from the 14th Finance Commission which can be done by way of loan restructuring or moratorium on loan repayments," Punjab Finance Minister Parminder Singh Dhindsa said on Tuesday.
Empowered Committee of the state Finance Ministers will meet on Wednesday in Delhi wherein 14th Finance Commission will also be there, said Dhindsa. The outstanding debt of Punjab is expected to reach whopping Rs 1.13 lakh crore by March 2014, with state government facing "lower" revenue mobilisation and "growing" expenditure. The SAD-BJP led Punjab government has projected to make fresh borrowing of Rs 14,199 crore during current fiscal.
The state government attributes its fiscal problems to outstanding debt which is the result of prolonged years of militancy in the state and constant decline in share of state in central taxes. He said the state government would also seek change in formula for devolution of funds to states, saying the developed states should not be "penalised" by way of distributing lower funds.
The state government is seeking weightage to ST/SC population (15 per cent), GSDP (15 per cent) of the state, fiscal capacity distance (15 per cent), fiscal discipline (5 per cent), Area (15 per cent) and population (35 per cent) to make devolution criteria "just and fair". As per 13th Finance Commission, the criteria and weights for inter-se distribution of central taxes among various states was population (25 per cent), Area (10 per cent),
Fiscal capacity distance (47.5 per cent) and fiscal discipline (17.5 per cent).
The state government is seeking 50 per cent of central taxes should devolve to states.
Holding "constant negligence" being meted out to state as cause of its fiscal problems, the state government rues that its share of Punjab in central taxes dropped from 2.45 per cent in 1970-75 to 1.389 per cent under 13th Finance Commission (2010-15).
Dhindsa said that the state government would also seek from the Commission to grant a Special Term loan and interest already paid by the state amounting to Rs 2,694 crore.
The Finance Minister further said it would also demand revenue deficit grant to the tune of Rs 3,000 crore from 14th Finance Commission.
Last year in September, when 14th Finance Commission visited the state, the state government had sought debt relief grant of Rs 24,813 crore and state specific grants of Rs 9,639 crore.
The 13th Finance Commission had already placed the states of Punjab, Kerala and West Bengal in the category of Revenue Deficit states and it recommended to the Union government to find out ways and means to bail out these states from financial stringency.
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