Demanding economic package for Punjab in Union Budget 2023-24

staff reporter


A head of the Union Budget 2023-24, the Economists for Public Interest, Patiala, Punjab, has written to Uninon Finance Minister Nirmala Sitharaman demanding an economic package for Punjab to revive its momentum of development and also gave several suggessions.

They listed several reasons that why the state should get the economic package. Professor Lakhwinder Singh, Professor Sukhwinder Singh and Professor Kesar Singh Bhangoo, who are the signatory of this letter observed that Punjab is a strategic state of India both in terms of providing food and national security of the country.

They said that Punjab has immensely contributed both components and proved it’s worth during Covid-19 pandemic. They said that according to Reserve Bank of India (RBI), Punjab state has accumulated debt of the order of Rs 3,05,126.3 crore (Rs 2,82,865 crore outstanding liabilities + Rs 22261.3 crore outstanding Guarantees) in 2021-22. This comes out to be 53.3 per cent of the Gross State Domestic Product (GSDP) in the end of March 2022. The annual interest liability turns out to be Rs 20315.5 crore in 2021-22, which is 45 per cent of the total own tax revenue of the state government in 2021-22. Due to non-sustainability of the debt, the Thirteenth Finance Commission of India has put Punjab state in the category of Debt Stressed one and recommended a financial package that was never realized. Now Punjab has transitioned from a “debt stressed” state to a “Debt Trapped” state. This has generated a typical crowding out effect on private investment in Punjab. Consequently, this has resulted into a slow growth and distorted structure of the economy.

They suggested that as a first step, moratorium on debt of Punjab may be granted at least for the next seven years. This will leverage Punjab state of interest payment. For the revival and rejuvenation of Punjab economy, the Union Government in its budget should grant annual investment deficiency package of the order of Rs 20,000 crore for the year 2023-24 and subsequently till the grant of moratorium on debt ends. This will build the momentum of development process and will crowd in private investment especially of a Punjabi diaspora. This will also induce the diaspora to send higher level of remittances that has been remained handy to ease balance of payment difficulties of the country. It will also provide right kind of signals to the foreign investors to invest in Punjab. This can turn out be a win-win situation both for Punjab economy as well as for the Indian economy.

They mentioned, “ In the post-independence India, Punjab has remained an iconic state for india and worls but the economic transformation that was initiated with the advent of green revolution could not be sustained due to lack of innovative ideas and leadership that could have managed the problems arisen in the transformation process”.

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