Akali-BJP government saddles Punjab with 31,000 crore debt liability

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SAD-BJP led Punjab Government’s decision of pruning mismatch in food grains stock is growing into a major controversy with the opposition parties attempting to reap the situation.

While the Congress party has decided to move the court against the move, the Aam Aadmi Party (AAP) has alleged the “nexus of Centre-State for foodgrain theft”.

Without fixing accountability for the missing foodgrain stock worth Rs 29,000 crore, the Akali-BJP government has saddled the state with another debt liability. The government will not just be borrowing Rs 31,000 crore for settling this loan but also be floating bonds of Rs 30,000 crore to repay the fresh loan. The state already has an outstanding debt of Rs 1.38 lakh crore.

According to a consortium of banks, the legacy food credit account of Rs 29,000 crore is the gap between the provisional loans granted to the state since 1994-95 and the value of actual food stock procured for the Centre.After meetings with a consortium of 67 banks, the government got an approval for a fresh loan of Rs 31,000 crore at a rate of interest (8.25 per cent) lower than the base rate (9.26 per cent) offered by banks. Since the consortium had to lend at a rate lower, a permission was sought from the RBI. It has now been granted. Once the loan is given, the state government will use it to settle its legacy food credit account – which, till recently, it was unwilling to acknowledge.

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Jakhar, who has been vigorously raising the issue of the missing food grains for quite some time, pointed out that the RBI and the consortium of 33 banks had earlier refused to provide the Cash Credit Limit (CCL) guarantee to Punjab over earlier this year.

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Reacting to the “admission made by the state government about missing food grains to the tune of Rs 31,000 crore”, Punjab Congress vice president and chief spokesperson Sunil Jakhar said: “You cannot convert a theft into a loan and put the liability on the people of the state for another 20 years.”

“Instead of putting the liability on the people of the state, responsibility must be fixed and the theft amount recovered from the personal properties of those responsible. Why should people of the state, who are already burdened with over Rs 1.25 lakh crore debt, bear the liability of the theft committed by few people in power?” he asked.

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“Come what may, the Congress party will not allow it. You cannot condone a massive scandal of such humongous proportion by an executive order. The Congress party will use all the legal and constitutional means to ensure that not only are the real culprits punished but also made to repay the money they have defrauded people off, from their personal accounts,” he asserted. Jakhar said that the truth had finally come out and the state government had to eventually admit to the fraud despite the BJP-led NDA government at the Centre “desperately trying” to shield the state government “under the patronage of Union Finance Minister Arun Jaitley”.

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To repay this new loan and the interest on it, the government proposes to float bonds. “Since no instalment has to be paid on the bonds, and it only requires an interest of 8.25 per cent, these bonds, once approved by the Centre, will help the state repay the new loan of Rs 31,000 crore,” said an official. He also said that the state was asking the Ministry of Finance to allow it to float bonds at a lower rate of interest than the existing 8.5 per cent.

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The state government earns around Rs 3,400 crore annually, which officials hope will increase each year with a rise in the MSP of foodgrains. However, there is no clarity on whether the government will be compensated for the taxes on grains by the Centre, beyond the promised five years, once the Goods and Services Tax regime is rolled out.A senior economist, requesting anonymity, said the government was just passing on the debt burden to its successor(s). Even as the state government is patting itself on the back for getting the loan at a lower rate of interest, and thus saving Rs 855 crore annually on interest, the Opposition has questioned the decision to square off the food credit account by taking a fresh loan.