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Aug 6, 2017 - Madhya Pradesh (8.54%), Haryana (8.30%), Maharashtra (7.71%) and Tamil ...... Punjab State Industrial Deve
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WHITE PAPER on

STATE FINANCES June 2017

GOVERNMENT OF PUNJAB DEPARTMENT OF FINANCE

WHITE PAPER State Finances

WHITE PAPER State Finances

CONTENTS Chapter No.

Name

Page No.

1

Executive Summary

1

2

Why a White Paper?

7

3

State Finances

19

4

Liability of Cash Credit Limit for Food Grains

59

5

Financial burden on account of UDAY Scheme

75

6

Public Sector Undertakings

81

7

Off Budget Funds

95

8

Annexures (I – XXII)

9

Abbreviations

10

Definitions

11

References

WHITE PAPER State Finances

LIST OF STATEMENTS Number Name

Chapter Name

Chapter Page No. No. 1 11

1.1

Outstanding Liabilities

Why a White Paper?

1.2

Loans raised by State Entities

Why a White Paper?

1

12

1.3

Outstanding Debt as on 31.03.2017

Why a White Paper?

1

15

1.4

True Financial Position -2016-17

Why a White Paper?

1

15

1.5

Important fiscal metrics

Why a White Paper?

1

17

WHITE PAPER State Finances

LIST OF TABLES Number Name

Chapter Name

Chapter Page No. No. 2 27

1

Pending liabilities of Atta Dal Scheme

State Finance

2

Unpaid Liabilities of State

State Finance

2

29

3

Composition of Revenue Receipts

State Finance

2

32

4

Share of Central Transfers

State Finance

2

34

5

Total Revenue Receipts

State Finance

2

35

6

Salaries, Pension and Interest Payments

State Finance

2

40

7

Share of Revenue and Capital Expenditure

State Finance

2

43

8

Trends in Revenue Deficit

State Finance

2

45

9

Trends in Fiscal Deficit

State Finance

2

46

10

Outstanding Debt to Total Revenue Receipts

State Finance

2

48

11

Outstanding Debt and Expenditure on Debt Servicing

State Finance

2

48

12

Borrowings from Agencies (2016-17)

State Finance

2

50

13

Government Guarantees

State Finance

2

53

WHITE PAPER State Finances

Number Name

Chapter Name

Chapter Page No. No. 2 54

14

Total Debt as on 31st March 2017

State Finance

15

Revenue Receipt - Actual v/s Budgeted

State Finance

2

55

16

Capital Expenditure- Actual v/s Budgeted

State Finance

2

56

17

Plan Outlay - Actual v/s Budgeted

State Finance

2

56

18

Terms of Agreement of CCL

3

70

19

PSPCL debt and transfer to PSPCL

4

78

20

Receipts and Expenditure of Boards/Funds/ - 2014-15 to 2016-17

Liability Of Cash Credit Limit For Food Grains Financial Burden On Account Of Uday Scheme Off Budget Funds

6

98

21

Receipts and Expenditure of Societies - 2016-17

Off Budget Funds

6

98

22

Receipts and expenditure of Societies for 2014-15 to 2016-17

Off Budget Funds

6

99

23

Income & Expenditure of PIDB

Off Budget Funds

6

101

24

Detail of debt raised by PIDB

Off Budget Funds

6

101

25

Expenditure detail of Punjab Mandi Board

Off Budget Funds

6

105

WHITE PAPER State Finances

LIST OF FIGURES Numb er

Name

Chapter No.

Page No.

1

GSDP Growth Rate

2

21

2

Balance in Current Revenues

2

23

3

Components of State's Total Revenue Receipts - Punjab (2016-17)

2

30

4

Composition of Revenue Receipts (% to Total Revenue Receipts)

2

31

5

Own Tax Revenue Receipts (2016-17)

2

33

6

Components of Expenditure (2006-07)

2

37

7

Components of Expenditure (2016-17)

2

37

8

Components of Revenue Expenditure

2

38

9

Total Revenue Expenditure (2006-07)

2

41

10

Total Revenue Expenditure (2016-17)

2

41

11

Revenue Deficit as % of GSDP

2

42

12

Fiscal Deficit as % of GSDP

2

46

WHITE PAPER State Finances

WHITE PAPER State Finances

EXECUTIVE SUMMARY

1. The new Government assumed office on 16th March 2017. On 29th March 2017, RBI shutdown the State treasury owing to the breach in the limits set by RBI. As on 31st March 2017 bills amounting to `7791 crore were pending and ultimately lapsed as the treasury was left with no money. 2. To meet the expenditure in implementing the Atta Dal Scheme, funds were arranged by the State Procuring Agencies (SPAs) at their own level by diverting funds from CCL provided for procurement of wheat and paddy. The unpaid liabilities of `1747 crore are still outstanding as on 31st March 2017. 3. The arrears of `2773 crore of DA for almost last 2 years have not been paid to the employees and payments have simply been kept in abeyance. 4. `2342 crore were pending as arrears of payment that the State Government has to make on account of power subsidy to the Punjab State Power Corporation Ltd. 5. The immediate commitment that the State government had to discharge including unpaid bills in the treasury when the new Government assumed office, was to the tune of `13039 crore. 6. When the new Government took over, it was welcomed with the additional liability of `29919.96 crore (as on 31st March 2017) in the form of loans to settle the so called CCL (Cash Credit Limit) legacy accounts. As a result the State Government shall have to bear an additional `270 crore per month and an annual liability of `3240 crore. 7. The previous Government had been forcing agencies like PIDB, RDB, PUDA and others to incur debt on its behalf. A part of this debt has also flown into the State treasury in what is called as 'informal debt', which stands at `4435 crore. 8. During the last 10 years, the growth rate of the State remained lower than the All India average except for the year 2013-14 in which the growth was slightly higher i.e. by meagre 0.23%, than the All India average. The growth rate was as low as 4.20% against 7.5% of All India level in the year 2014-15. Page | 1

Executive Summary

WHITE PAPER State Finances

9. The average GSDP growth recorded by the State during the period from 200607 to 2015-16 has been at 6.37% which is lower than the average growth recorded by the States like Goa (10.68%), Bihar (10.08%), Gujarat (9.70%), Madhya Pradesh (8.54%), Haryana (8.30%), Maharashtra (7.71%) and Tamil Nadu(7.66%). 10. The State continued to hold the top position in Per Capita Income across the country for a long time, it has now lost the race to the States like Haryana and Maharashtra. The State rank has slid from the top to the seventh position amongst the major States. States like Maharashtra, Kerala, Tamil Nadu, Karnataka, Gujarat and even Himachal Pradesh are now ahead of Punjab. 11. Each year, before the Annual Budget is presented, an estimate of the Balance in Current Revenues (BCR) is made. The State has been persistently running huge negative BCR starting with (-) `3656 crore in 2007-08, (-) `5757 crore in 200910 which increased to (-) `6544 crore in 2014-2015, (-) `6138 crore in 2015-16 and was (-) `4488 crore in 2016-17. 12. State’s own revenues as a share of total revenue have declined from 77.34% in 2006-07 to 68.50% in 2016-17. As against this in the corresponding period, the share of Central taxes has gone up from 22.66% to 31.50%. This indicates a perceptible decline in the State’s ability to raise resources internally during the last 10 years, 2007-2017. HUGE AMOUNT OF OUTSTANDING LIABILITIES 13. The share of central taxes in total receipts have increased from 9.32 % (2006-07) to 21.14 % (2016-17) the State’sbills increasing dependence 1.4 indicating Apart from pending amounting to about upon `7791Central crore, transfers and devolution during the 10 that lapsed onyear theperiod. 31st March, 2017, the previous 14. The transfer of Grants-in-Aid from Centre has decreased from 13.33% in 2006Government left behind outstanding liabilities amounting 07 to 10.36% in 2016-17. The primary for expenditure this is the lack of the State to `13039 crore, byreason deferring on various counts, release its part of the share central schemes. As a 1.1. result, the State has been whichinare shown in Statement unable to fully leverage the Grants-in-aid from the Central Government. 15. In 2016-17, 85% of total Revenue Receipts were incurred on salaries, interest payments and pensions. If we add the power subsidy, this together accounts for 102% of the Revenue Receipts of the State. 16. The average salary of the Punjab Government employees is much higher as compared to the other States and even the Government of India. Page | 2

Executive Summary

WHITE PAPER State Finances

17. Revenue Expenditure has increased from `18544 crore (87.76% of total expenditure) in 2006-07 to `52018 crore (92.18% of total expenditure) in 201617. 18. During the same period, expenditure on Salaries rose from `5783 crore to `19758 crore (an increase of 242%), on Pensions from `1905 crore to `8749 crore (an increase of 359%) and on Interest from `4152 crore to `10098 crore (an increase of 143%). 19. The share of capital expenditure has declined over the years, from 12.24% in 2006-07 to 7.82% in the year 2016-17. The expenditure had fallen to as low as 4.61% in the year 2011-12 20. Revenue Deficit has hit its worst in the last ten years. In 2006-07 the Revenue Deficit was `1749 crore. However, this Deficit recorded more than two-fold increase in the very first year of the previous government coming into power i.e. 2007-08 at `3823 crore. It has since increased to `8550 crore in 2015-16 and the position is much worse in 2016-17. The State was to achieve a zero revenue deficit from the year 2011-12 onwards. 21. Fiscal deficit of `4384 crore was recorded in the year 2006-07, which has 1.5 It is worth noting that most of these outstanding increased by 168% to `11762 crore in 2015-16. This trend indicates that the liabilities relate to benefits for the scheduled castes and Government spending was being increasingly financed by raising loans. other disadvantaged sections of society, dues of 22. Revenue deficit was at 1.38% of the GSDP at the end of financial year 2006-07, employees, funds received from the Government of it increased 2.18% in the year 2015-16. India and financial institutions for specific projects or 23. The total debt servicing expenditure in 2016-17 was `14145 crore (Principal awards of the Central and State Finance Commissions `4047 crore and Interest Payment `10098 crore). This is likely to increase by in favour of ULBs and PRI's. Not only are these more than 30% in 2017-18 on account of the increased debt liabilities of liabilities going to pre-empt the future budgetary `29919.96 thatevent the previous upon itself in exchange for provisions,crore in the of theirGovernment not being took settled concealing the liabilities on likely food account. quickly, they are also to block the future 24. The State introduced the “Guarantee Redemption Fund Scheme”, with an development of the state. objective to meet its obligations arising out of the Guarantee extended to State level entities and was required to contribute minimum amount of `1241.58 Crore over the period 2013-14 to 2015-16, to cover any unforeseen State Guarantee invocation.

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Executive Summary

WHITE PAPER State Finances

However, poor recovery and non-contribution, has put the State fiscal to a great risk. 25. The Government has extended long-term Guarantees to the tune of `20608.17 crore as on 31.03.2017 (the cap is 80% of the total Revenue Receipts of previous year). While the above figures may look healthy indicating a cushion for the State government to provide Guarantees for the debt that its enterprises may raise, the truth is that the Guarantees provided earlier to PSPCL and the food agencies have now been converted into State debt as a result of the UDAY scheme and the loan taken over on account of CCL of food agencies by the State Government. 26. The shortfall between the actual revenue receipts and the budgeted revenue receipts has been `2009 crore in 2010-11, `7562 crore in 2013-14 and `4773 in 2016-17. 27. Similarly, the actual expenditure against the budgeted estimates on plan allocations was 143.80% of the approved outlay in 2006-07 whereas the same has since been decreasing over the subsequent years and in the year 2011-12 this ratio came down to 64.73%. 28. Despite the support of the State Government under the UDAY Scheme to PSPCL, it has been running into losses from its very inception. It suffered losses of `1695 crore during the year 2015-16 and has accumulated losses of `3196 crore as on 31.03.2016. 29. The total amount of outstanding Government loans of PSUs is `17030.92 crore. The outstanding loans of other Institutions were `22593.95 crore, and loans `20608.17 crore was outstanding against Government Guarantee. In case of default, it is the bounden duty of the State Government to repay these loans to the lenders. The State Government received only a small amount of `4.01 crore during the year 2015-16 as dividend on a huge investment of `8234.30 crore in these PSUs and Co-operative Institutions. 30. It has been observed that amongst the Administrative Departments there is an increasing tendency to float Boards, entities/societies such as PIDB, PMB, PLRS, ETTSA etc..

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Executive Summary

WHITE PAPER State Finances

These entities retain the revenues generated by various levies, in a separate corpus fund, instead of depositing the same in the Consolidated Fund of the State. These expenditure were neither presented for the sanction of the Punjab Vidhan Sabha and nor were these subject to the audit of CAG. 31. PSWC was constrained to annul the tendering process. Surprisingly, PUNGRAIN without awaiting the report of the subcommittee of the Ministers and without any approval and guarantee for silo capacity utilization from FCI, proceeded ahead with the creation of silo capacity against the Allocation of Business rules. The haphazard creation of silo capacity by PUNGRAIN without any uniform policy and study of existing storage capacities of all agencies may affect present utilization of storage capacities of State Procuring agencies (SPAs) resulting in financial loss to SPAs. 32. It is observed that the decisions of these entities were unplanned, scattered and against the core mandate of the constitution of Boards/societies and also ‘need based assessment’ was found missing. The CAG report has observed this as a violation of Article 266 (1) of the Constitution of India.

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Executive Summary

WHITE PAPER State Finances

Page | 6

Chapter 1: Why a White Paper?

WHITE PAPER State Finances

WHY A WHITE PAPER?

Chapter 1

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Chapter 1: Why a White Paper?

WHITE PAPER State Finances

Page | 8

Chapter 1: Why a White Paper?

WHITE PAPER State Finances

WHY A WHITE PAPER? Chapter 1

1.0 A White Paper is defined as, "An authoritative report or guide that informs readers concisely about a complex issue and presents the issuing body's philosophy on the matter. It is meant to help readers understand an issue, solve a problem or make a decision". This White Paper is nothing more or nothing less than that. It is a presentation of the most complex The Reserve Bank of India in its letter of 29th March, 2017 States: “…As per the scheme of Ways and Means Advances to State Governments for the year 2016-17, RBI is constrained to suspend the payments to State Government. RBI has accordingly advised its offices and agencies to suspend payments of the State Government with effect from March 29th, 2017…”

problem being faced by the state Government in the simplest possible way.

THE RESERVE BANK OF INDIA (RBI) SHOCKER 1.1 On assuming office on the 16th March, 2017, after the conclusion of elections to the Punjab Vidhan Sabha, this Government was shocked to learn that the financial position of the state was far worse than even their wildest imagination. While the treasury was virtually lying closed under the weight of bills amounting to about `7791 crore pending clearance , farmers were all set to sell their Rabi crop and the Government was awaiting sanction of the Cash Credit Limit (CCL), came a shocker from the RBI, vide it's letter dated the 29th March, 2017, which reads as follows. "...As per the scheme of Ways and Means Advances (WMA) to State Governments for the year 2016-17, RBI is constrained to suspend the payments to State Government, RBI has accordingly advised its offices and agencies to suspend payments of the state Government with effect from March 29th, 2017..."

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Chapter 1: Why a White Paper?

WHITE PAPER State Finances

“…in the face of 'smart' accounting

1.2

The fact that the RBI had to resort to the extreme step of suspension of payments to the state Government, perhaps,

practices resorted to

for the first time in its history, speaks volumes about the

by the previous

precarious financial position, the new Government inherited

Government, they

from its predecessor.

reveal the picture, but only partially….”

THE ART OF BOOK-COOKING 1.3

Normally, budget documents and CAG Accounts for the relevant years ought to reflect the true state of State's finances. However, in the face of 'smart' accounting practices resorted to by the previous Government, they reveal the picture, but only partially. The art of book cooking comprises (i) fast-forwarding the receipts; (ii) deferring expenditure; (iii) non-provisioning for contingent liabilities and; (iv) incurring off-budget liabilities. In the process, the integrity of the budgets presented by them becomes deeply suspect, thus blunting the very edge of the Government accountability.

HUGE AMOUNT OF OUTSTANDING LIABILITIES 1.4

Apart from pending bills amounting to about `7791 crore, that lapsed on the 31st March, 2017, the previous Government left behind outstanding liabilities amounting `13039 crore, by deferring expenditure on various counts, which are shown in Statement 1.1.

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Chapter 1: Why a White Paper?

WHITE PAPER State Finances

“…in the event of

Statement 1.1: Outstanding Liabilities (`Crore) Sr. No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

12. Total

1.5

Description Arrears of Dearness Allowance Arrears of Power Subsidy Arrears of Atta Dal Scheme Non-release of funds received from the Govt. of India (GoI) Non-payment of pensions Non-payment of Scholarships to the students belonging to SC category Arrears of Shagun Scheme Other Welfare Schemes Non release of funds to the Urban Local Bodies (ULBs) under the Central and State Finance Commissions Non release of funds to the Panchayati Raj Institutions under the Central and State Finance Commissions Non-release of specific purpose institutional funds (a) NABARD (b) World Bank Others

Amount 2773 2342 1747 1413 692.04 35.31

their not being settled quickly, they are also likely to block the future development of the state…”

18.61 291.16 253.94 386.03

174 45 2867.91 13039

It is worth noting that most of these outstanding liabilities relate to benefits for the scheduled castes and other disadvantaged sections of society, dues of employees, funds received from the Government of India and financial institutions for specific projects or awards of the Central and State Finance Commissions in favour of ULBs and PRI's. Not only are these liabilities going to pre-empt the future budgetary provisions, in the event of their not being settled quickly, they are also likely to block the future development of the state.

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Chapter 1: Why a White Paper?

WHITE PAPER State Finances

“…As raising of loans and expending wherefrom was an off budget exercise, it

MORTGAGING THE FUTURE

1.6

Yet another very disturbing feature of the State's fiscal is the previous Governments' penchant for abusing its

totally escaped due

various entities to indiscriminately raised loans by

scrutiny, legislative

mortgaging their future revenues or by hypothecating

approval and CAG

immovable properties at their disposal. The Punjab

audit…”

Infrastructure

Development

Board

(PIDB),

Rural

Development Board (RDB) and the Punjab Urban Development Authority (PUDA), are prominent among such entities. Details of loans raised by them are set out at Statement 1.2 below. Statement 1.2: Loans raised by State entities (` Crore) Sr. No. 1. 2. 3. Total

Name of Entity PIDB RDB PUDA

Amount of Loan 4722.89 5795.94 2124.93 12643.76

Loan Outstanding 3172.93 2090.40 1413.49 6676.82

Source: Concerned Entities

1.7

Raising loans in this manner is nothing short of selling the family silver to run your kitchen. However, they provided a handy window to fund the populist programs of the then ruling dispensation. As raising of loans and expending wherefrom was an off budget exercise, it totally escaped due scrutiny, legislative approval and CAG audit. Therefore, a special audit would be absolutely necessary to ascertain as to whether the loans so raised have been properly accounted for and their utilization is in accord with the statutory mandate of these entities and is in keeping with the principles of financial propriety and prudence.

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Chapter 1: Why a White Paper?

WHITE PAPER State Finances

“…The alacrity with

THE DUBIOUS LEGACY ACCOUNTS 1.8

which this was done

Faced with a huge accumulated gap between the outstanding CCL and value of stock of food grains RBI's direction to the funding banks to provide for the mismatch and at the sufferance of being denied the facility of CCL, the state Government decided to

not only provided a convenient cover to the various acts of malfeasance, but the urgency to recover the due amount from

convert a whopping gap of `29919.96 crore (as on

the Government of

31.03.2017) into a clean term loan. It is shocking to

India and the

know that this was done, even without the elementary

opportunity to strike a

precaution of going into the reasons for the emergence

fair bargain with them

of such a huge gap and fixing responsibility of the

and the banks was

concerned officials of the state procurement agencies.

also lost…”

The alacrity with which this was done not only provided a convenient cover to the various acts of malfeasance, but the urgency to recover the due amount from the Government of India and the opportunity to strike a fair bargain with them and the banks was also lost. As a result, the Government of Punjab was burdened with an onerous debt burden with an annual debt-servicing liability of `3240 crore for the next twenty years. The then Government also agreed to square-up any gap between the outstanding CCL and value of stock that might emerge in the future as well. In fact, a budgetary support of `1193.65 has already been provided for this purpose. This is against the cardinal principle of the Centralized Procurement Scheme that the State procurement agencies being agents of the Government of India are neither to make any profit nor to incur any loss

in

the

procurement

operations

and

the

Government of India is expected to reimburse all bona fide cost of procurement incurred by them.

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Chapter 1: Why a White Paper?

WHITE PAPER State Finances

“...it is noted that the

This also flies in the face of the repeated claim of the

decision of the then

previous Government that the gap was fully covered by

Government to

receivables from the Government of India.

square-up the gap between the

1.9

Secondly, to draw a parallel between squaring up of

outstanding CCL and

the Food Account in 2004 and what was done on

value of stock was

10.03.2017 (conversion of a whopping gap of

actually given effect

`29919.96 crore into a clean term loan) is rather far-

to on 10.03.2017, just

fetched. As the reasons for the huge gap between the

a day before the

outstanding CCL and value of stocks post 2004 cleanup

Assembly results

are altogether different drawing a parallel between

were scheduled to be

them by dubbing them as a 'Legacy Issue' is nothing

declared…”

more than an attempt at shoving the real issue under the carpet. 1.10

Thirdly, it is noted that the decision of the then Government to square-up the gap between the outstanding CCL and value of stock was actually given effect to on 10.03.2017, just a day before the Assembly results were scheduled to be declared. Prudence demanded that the new Government, which were to assume office after the declaration of result should have been given an opportunity to take their own call in the matter.

THE DEBT TRAP 1.11

The state is already in the tight grip of a debt trap. By Government books, outstanding debt was `148832 crore at the end of 2016-17, In reality however, it is far higher, if deferred liabilities, contingent liabilities and newly acquired liabilities on account of gap in the CCL account and UDAY bonds are reckoned. Statement 1.3 puts this issue in the correct perspective.

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Chapter 1: Why a White Paper?

WHITE PAPER State Finances

Statement 1.3: Outstanding Debt as on 31.03.2017 (` Crore) Sr No 1

Description

“...In reality however, it is far higher, if

Amount

deferred liabilities,

Outstanding debt including UDAY bonds 2015-16 and 2016-17 2 Loans from State entities 3 Clean loan to cover CCL gap Total debt 5 Outstanding guarantees Total debt + guarantees

153098

contingent liabilities and newly acquired

4435 29919.96 187452.96 20608.00 208060.96

liabilities on account of gap in the CCL account and UDAY bonds are reckoned…”

Source: (AG Provisional Accounts 2016-17) A. Total Debt as % of GSDP:

44%

B. Total Debt + guarantees as % of GSDP:

49%

C. Debt Service Ratio to TRR:

31.15%*

* This figure is likely to increase sharply in 2017-18 on account of increased additional Debt Servicing of `3240 crore per annum on account of the clean term loan taken for the CCL of food account in March 2017

1.12

From the foregoing analysis, it is evident that the financial position of the State reflected in its various budgetary documents, cannot be taken on its face value. To know the true State of the State Finances, a trueing up exercise, by reckoning

the various

unknowns , is called for which is attempted in Statement 1.4 for the year 2016-17 Statement 1.4 (a): True Financial Position -2016-17 (` Crore) Sr. No.

Item

2016-17 (BE)

2016-17 Shortfall (Provisional /Excess AG Account)

1

Revenue Receipts

50181

45408

- 4773

2

Market Borrowings

12819

13600

781

Source: (State Budget Document and Finance Account of AG Punjab) Source: (AG Provisional Accounts 2016-17)

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Chapter 1: Why a White Paper?

WHITE PAPER State Finances

Statement 1.4 (b): True Financial Position -2016-17 (` Crore) Sr. No

Item

1

2

3

4

2016-17 (Provisional A G Account)

Truing Up Position 201617

Revenue Deficit

6611

19650

Revenue Deficit as a % of GSDP

1.55%

4.59%

Fiscal Deficit

18105

65330

Fiscal Deficit as a % of GSDP

4.23%

15.27%

Outstanding Debt

148832

187453

Outstanding Debt as % of GSDP

34.78%

43.81%

Primary Deficit

8007

55232

Primary Deficit as % of GSDP

1.87%

12.91%

“….the Government revenue has not kept pace with the Government expenditure, leading to ballooning revenue and Fiscal Deficits…”

Source: (AG Provisional Accounts 2016-17)

IN A FREE FALL 1.13

Important fiscal metrics, over the last ten years, lead to the inescapable conclusion that the State Finances are in a free fall. These are shown in Statement 1.5.

1.14

A plain reading of these numbers reveals that:  the Government revenue has not kept pace with the Government expenditure, leading to ballooning Revenue and Fiscal Deficits  A

high

percentage

of

expenditure

discretionary and committed, which

is

non-

hardly

leave

any fiscal space for the new Government.

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Chapter 1: Why a White Paper?

WHITE PAPER State Finances

“…if no corrective

 Revenue Deficit at 54% of Fiscal Deficit results in

measures are taken,

most of the loans raised by the Government being

it will take a heavy toll

used for meeting the committed expenditure or

on the future

repaying the past loans.

development of the

 Capital expenditure a meagre 7% of total expenditure

State...”

shows the Government is hardly investing in the future of the State.  Outstanding debt at 43.81% of GSDP and Debt Service

Ratio

(DSR)

at

31.15%

is

totally

unsustainable  The State's fiscal is inflicted with a deep-rooted structural imbalance and, if no corrective measures are taken, it will take a heavy toll on the future development of the State. Statement 1.5: Important fiscal metrics (` Crore) Sr. No

Description

2006-07

2016-17*

i)

Revenue Deficit

1749

6611

ii)

Fiscal Deficit (excluding UDAY)

4384

12336

iii)

Primary Deficit (Fiscal Deficit less Interest) (excluding UDAY) Revenue Deficit as % of Fiscal Deficit Committed Expenditure as % of Revenue Receipt Capital Expenditure as % of Total Expenditure States own Revenue as % of its Total Revenue Outstanding Debt

232

2238

40%

54%

71%

85%

12.24%

7.82%

77.34%

68.5%

51155

187453

305%

413%

40%

44%

iv) v) vi) vii) viii) ix) x)

Outstanding Debt as % of Revenue receipts Outstanding Debt as % of GSDP

Source: (State Budget Document and Finance Account of AG Punjab) * Data for 2016-17 are the initial figures published by the AG Punjab

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Chapter 1: Why a White Paper?

WHITE PAPER State Finances

“…an empty treasury

CONCLUSION 1.15

and fast development

The State's financial decline has now seamlessly merged into its economic decline. Punjab's economy

do not go together for a very long time…”

has been in a state of precipitous decline over the last one decade. During this period the rate of growth has been consistently below the national average. It is now one of the slow growing states of the country. In percapita terms, it has slid from the top to the seventh position amongst the major states. The gap between the per capita income of Punjab and the national per capita income is closing down very quickly. It holds a clear lesson that an empty treasury and fast development do not go together for a very long time. Weak finances have also impaired the capacity of the Government to deliver quality public services to its people. To conclude on a positive note, one may say that, the prevalent financial and economic situation is a reason enough for the Government to act fast and decisively.

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Chapter 1: Why a White Paper?

WHITE PAPER State Finances

STATE FINANCES

Chapter 2

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Chapter 2: State Finances

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Chapter 2: State Finances

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STATE FINANCES Chapter 2

2.0 A graphical depiction of the rate of growth of GSDP of the State and its comparison with All India level for the period 2006-07 to 2016-17 in Figure-1 reveals that the growth rate of State was one of the highest i.e. 10.18% in 2006-07 and was more than the All India average of 9.57%. However, in last 10 years, the growth rate of the State remained lower than the All “…the growth rate of

India average except for the year 2013-14 in which the growth

State was one of the

was slightly higher i.e. by meagre 0.23% than the All India

highest i.e. 10.18% in

average. It came down as low as 4.20% against 7.50% of All

2006-07 and was

India level in the year 2014-15. This clearly shows that the

more than the All

State has been falling behind the national average,

India average of 9.57%...”

continuously.

Figure-1: GSDP Growth Rate (In %) “…It came down as low as 4.20% against 7.50% of All India level in the year 2014-15…”

Source: (Department of Economic & Statistical Analysis, Punjab) Note: *From 2012-13 onwards at 2011-12 prices.

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“…the State is constantly facing grave paucity of resources for financing its Capital Expenditure…”

2.1 From the nationwide comparison of growth trajectory of various States (Ministry of Statistics and Programme Implementation, GoI), one can observe that the average growth of GSDP recorded by the State of Punjab for the period 2006-07 to 2013-14 has been at 6.85%, which is lower than the average growth recorded by the States like Bihar (10.85%), Gujarat (8.63%), Madhya Pradesh (8.62%), Haryana (8.43%), Maharashtra (8.44%) and Tamil Nadu (8.60%). The details are at Annexure I. 2.2 When one compares the Per Capita Income of the State with the other States and the national average, the picture is very discouraging. While the State continued to hold the top position in Per Capita Income across the country for a long time, it has now lost the race to the States like Haryana and Maharashtra. The State slid from the top to the seventh position amongst the major States. States like Maharashtra, Kerala, Tamil Nadu, Karnataka, Gujarat and even Himachal Pradesh are now ahead of Punjab. 2.3 The State finances are in a perilous position. Apart from meeting the day-to-day challenge of keeping the treasury afloat for the routine administrative Expenditure, the State is constantly facing grave paucity of resources for financing its Capital Expenditure. The situation is alarming. Each year, before the Annual Budget is presented, an estimate of the Balance in Current Revenues (BCR) is made. BCR indicates as to what the State can contribute to development after meeting its inevitable routine Expenditures. If Revenue Expenditure is more than Revenue receipts, it means that the State has to devote some of its borrowing to first meet its Revenue Expenditure, and correspondingly funds available for financing development will reduce.

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The State has been persistently running huge negative BCR starting with (-) `3656 crore in 2007-08, (-) `5757 crore in 2009-10 which increased to (-) `6544 crore in

“…If Revenue Expenditure is more than Revenue receipts, it means that

2014-2015, (-) `6138 crore in 2015-16 and (-) ` 4488 crore

the State has to

in 2016-17. It must be mentioned that, the BCR in the year

devote some of its

2006-07 was (+) `2252 crore given at Annexure II. In the

borrowing to first

process, unfortunately, the budgets have lost their sanctity.

meet its Revenue

The State unfortunately, has been living on a financial lie

Expenditure, and

and ignoring truth for a long time.

correspondingly funds available for financing development will

Figure-2: Balance in Current Revenues (` crore)

reduce… ”

2006- 2007- 2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 201607 08 09 10 11 12 13 14 15 16 17 BE BCR 2252 -3656 -3637 -5757 -4650 -6373 -6224 -5739 -6544 -6138 -4488

Source: (Report of the Comptroller and Auditor General of India on State Finances)

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“…the State was facing liquidity crunch for 269 days in the year 2016-17...”

WAYS & MEANS, AND OVERDRAFT 2.4 The RBI has fixed the Ways and Means Advance (WMA) limit at `925 crore for the State of Punjab from February 2016. Once the payment from the State's account exceeds the actual receipt at any point of time, the treasury goes into ways and means. Further, whenever the net payment out of the State treasury crosses WMA, the State goes into overdraft. As per the RBI guidelines, the State can be in overdraft for 36 working days in a quarter i.e. 144 days in a full year. RBI guidelines mandate that the State treasury cannot be in overdraft for a period of more than 14 working days continuously. In case it happens, the RBI stops all payments and no cheque issued by the State government is honored. Over and above this, in case the overdraft exceeds more than 100% of the ways and means limit, the payments are allowed only up to 5 working days. If the over payment is not brought down below the level of `925 crore, again the payments will be stopped. 2.5 Unfortunately, the RBI had to stop the payments on 29th March 2017. This has put the State in a very embarrassing position and may adversely affect the credibility of its future borrowings and

the

sovereign

guarantees

issued

by the

State

Government for future. Certainly, it does not behove well for the Fiscal health of the State. 2.6 During the year 2016-17, the State remained in overdraft for 104 days against the 144 days permissible in a year and in addition, it remained under Ways and Means Advances (WMA) for 165 days. Thus the State was facing a liquidity crunch for 269 days in the year.

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“…The immediate

UNPAID LIABILITIES

commitment that the

2.7 The immediate and medium term liability that the new government has to discharge is staggering. The

State government had to discharge including unpaid bills

immediate commitment that the State government had to

in the treasury when

discharge including unpaid bills in the treasury when the

the new government

new government assumed office would be to the tune of

assumed office would

`13039 crore. The details of which are explained in the

be to the tune of

following paras:

`13039 crore…”

2.8 Pending Liabilities of various grants/loans received from Government of India: The State Government is yet to release `2437 crore on account of various grants/loans received from Government of India during the year 2016-17. This includes Central Assistance for various Central Sector Schemes; NABARD loans; External Aided Projects (EAP); Welfare Schemes; and other Flagship Programs. 2.9 The Government of India has identified certain centrally sponsored

schemes,

total

66,

which

are

being

implemented in the State of Punjab also. The schemes pertain to various departments and ministries. The proposals are being prepared by the State departments, which are approved by various competent authorities of the Government of India. The funding pattern under the various schemes varies from 100% centrally sponsored to those that are shared as 75:25 or 60:40 etc.

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“…Funds amounting

The major centrally sponsored schemes are RKVY,

to `1413 crore have

Mid Day Meal, Sarv Shiksha Abhiyan, National Health

been received from

Mission,

Government of India

SMART

CITIES,

AMRUT

etc.

The

Government of India releases funds which are first

in 2016-17, which

received in the treasury and after a proposal is

were not released to

received

the departments...”

from

the

concerned

administrative

department, the same are released to them. Funds amounting to `1413 crore have been received from Government of India in 2016-17, funds amounting to `150 crore related to welfare schemes for SC/BCs, which were not released to the departments; and the same were utilized/ diverted either in meeting the Revenue Expenditure or in other State schemes 2.10

There are certain projects which are funded through loans from NABARD. The proposals are prepared by the department and sent to NABARD which has fixed a limit for the State. This limit is fixed on yearly basis. For the year 2016-17, NABARD had fixed a limit of `800 crore. The NABARD loans are extended to the State at an interest rate of 5.5% and are thus low cost funds which help the State in building Capital assets. However, even these funds amounting to `174 crore could not be released to the departments concerned and were diverted elsewhere.

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2.11

Pending Liability of Atta-Dal Scheme: Atta Dal Scheme was launched by the State government on 15 August, 2007. Under the scheme, wheat and pulses are being supplied on subsidized rates of `2 per kg and

“…The pending liability on this account (Dearness Alone) alone is

`2773 crore…”

`30 per kg respectively. To implement Atta Dal Scheme, no financial assistance was provided by the previous Government. To meet the Expenditure, funds were

arranged

by

the

procurement

agencies

(PUNSUP, MARKFED, PSWC, PAIC) at their own level by diverting funds from CCL provided for procurement of wheat and paddy. A total liability of `1747 crore is still outstanding with various agencies, as per details given in Table 1. Table 1: Pending liabilities of Atta Dal Scheme (` crore)

Sr. No 1 2 3 4

Name of agency PUNSUP MARKFED PSWC PAIC TOTAL

Claim 1125.25 349.27 52.34 220.71 1747.57

Source: (Department of Food & Civil Supplies, Government of Punjab)

2.12

Pending Liability of Dearness Allowance: State Government has been giving D.A. to its employees from time to time. However, the date of giving D.A. is not the same as the date given by the Government of India. A decision to give arrears has been taken only in respect of D.A. for the installments due from 100% to 113%. The pending liability on this account alone is `2773 crore (Annexure III).

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“…bills of `7791

2.13

crore including some

been providing free power to the farmers for the tube

of the above and a

wells and also to some other sections of the society

few other like salary arrears, retiral benefits, office

Power Subsidy: The Government of Punjab has

both domestic and industrial. 2.14

The agricultural consumption and its Tariff are

expenses, POL etc.

determined on year to year basis by the Punjab State

were pending in

Regulatory Commission on the basis of Tariff petition

treasury, all of which

filed by PSPCL. Based on commitment given by the

lapsed on 31.03.2017

Government, the Commission determines the amount

as the treasury did

of subsidy for different categories of consumers in its

not have funds to

Tariff order. The amount subsidy for SC DS & Non SC

honour these bills...”

BPL consumers determined in the Tariff order PSERC for the year 2016-17, was `6113.66 crore and `1483.74 crore respectively. 2.15

Further,

additional

subsidy

determined

by the

Commission for OBC consumers and small power consumers makes the total subsidy payable during 2016-17 to `7943.07 crore, out of which, only an amount of `5600.70 crore was released, leaving a balance of `2342.37 crore as on 31.03.2017. This has led to a severe stress on the financial health of PSPCL. 2.16

Apart from the above, bills of `7791 crore including some of the above and a few other like salary arrears, retiral benefits, office expenses, POL etc. were pending in treasury, all of which lapsed on 31.03.2017 as the treasury did not have funds to honour these bills.

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2.17

In

addition,

many

departments

especially

“…the total unpaid

the

liabilities of State

Engineering Departments have incurred liabilities

Government stood at

based on the budgetary provisions during the course

`13039 crore as on

of the year 2016-17, whose bills would now be

31st March 2017,

presented to the State treasury.

plus some of the

Thus, the total unpaid liabilities of State Government

liabilities that would

stood at `13039 crore as on

be presented during

31st

March 2017, plus

some of the liabilities that would be presented during

the course of the year

the course of the year for works that have been

for works that have

executed based on the inflated budgetary provisions.

been executed based on the inflated budgetary provisions...”

Table 2: Unpaid Liabilities of State (` crore)

Sr. No. A. B. C.

Particulars Atta-Dal Scheme Dearness Allowance Power Subsidy Pending Bills in the treasury including D. some of the above and a few others like salaries, office expenses, POL etc. Total (A to D)

Amount 1747 2773 728 7791* 13039

*This includes the amount of lapsed bills of:   

Centrally Sponsored Schemes: `845.11 crore State Plan schemes: `1857.86 crore Power Subsidy: `1614 crore

STATE REVENUE RECEIPT 2.18

The Receipts on account of Revenue in the consolidated fund of the State arise mainly from three major streams. These are as follows:

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“…The share of

 State’s Own Tax Revenue

Central transfer grew

 State’s Own Non Tax Revenue

in the year 2015-16

 Central Transfers (Tax Share & Grants)

by 70%. This was on account of the award

2.19

State’s own Tax Revenue constitutes the major share

of the Fourteenth

of the total Revenue Receipts of the State, accounting

Finance

for as much as 61% in the year 2016-17 (Data for 2016-

Commission…”

17 are the initial figures published by the AG Punjab). The own Non Tax Revenue in State accrues largely from fees levied on services and accounts on an average to about 7% of the total Revenue Receipts. The State’s share of Central Taxes and Grants from Central Government depends on the awards of the Finance Commission and the allocations on account of Central Schemes respectively and together account for 32% of the Revenue Receipts. 2.20

The share of Central Taxes grew in the year 2015-16 by 70%. This was on account of the award of the Fourteenth Finance Commission. The increase was on account of different principles adopted by the FFC/ Government of India for sharing of central taxes with the states.

Figure 3: Components of State's Total Revenue Receipts - Punjab (2016-17; ` crore)

Source: (Data for 2016-17 are the initial figures published by the AG Punjab)

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“…the State’s own

STATE’S OWN TAX & NON-TAX REVENUE 2.21

Revenues as a share

Revenue Receipts increased from `16795 crore in 2006-07 to `45408 crore in 2016-17 (an increase of 170%). Against this, receipts from Government of India

of total Revenue has declined from 77.34% in 2006-07 to 68.50% in 2016-17…”

i.e. share of central taxes and grants increased from `3806 crore to `14304 crore during the corresponding period (an increase of 276%) whereas State’s Own Tax and Non-Tax Revenues increased from `12990 crore to `31104 crore (an increase of 139%) 2.22

From the trends in Revenue Receipts for the period 2006-07 to 2016-17 as depicted in Figure 4, it may be seen that the State’s Own Revenues as a share of total Revenue have declined from 77.34% in 2006-07 to 68.50% in 2016-17 (Table 3). As against this in the corresponding period, the share of Central transfers has gone up from 22.66% to 31.50%. This indicates a perceptible decline in the State’s ability to raise resources internally.

Figure 4: Composition of Revenue Receipts (% to Total Revenue Receipts)

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“…The share of Central transfers has gone up from 22.66%

Table 3: Composition of Revenue Receipts (In %) Year

Central Transfers

Tax Revenue

Non-Tax Revenue

Total

Share in Taxes

Grant in Aid

Total

2006-07

53.69

23.65

77.34

9.32

13.34

22.66

2007-08

51.46

27.31

78.77

10.27

10.97

21.24

2008-09

53.83

27.92

81.75

10.06

8.18

18.24

2009-10

54.34

25.51

79.85

9.68

10.47

20.15

2010-11

60.95

19.31

80.26

11.05

8.69

19.74

2011-12

71.82

5.33

77.15

13.55

9.30

22.85

2012-13

70.47

8.20

78.67

12.66

8.66

21.32

2013-14

68.69

9.09

77.78

12.62

9.69

22.31

2014-15

65.53

7.38

72.91

12.05

15.04

27.09

2015-16

64.28

6.38

70.66

19.29

10.05

29.34

2016-17

61.26

7.24

68.50

21.14

10.36

31.50

to 31.50%.This indicates a

State’s Own Revenue

perceptible decline in the State’s ability to raise resources internally...”

Source: (State Budget Document and Finance Account of AG Punjab) Note: Data for 2016-17 are initial figures published by AG Punjab.

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2.23

A declining trend in the State’s Own Revenues and dependence on the Central Transfer of funds over the period of ten years indicates a narrowing tax base, a contraction of charged Government services and non-

“…indicative of systemic weaknesses and a suboptimal resource mobilization within the State…”

recovery of the economic cost of services. This is indicative of systemic weaknesses and a suboptimal resource mobilization within the State. Figure 5: Own Tax Revenue Receipts (2016-17) (` crore)

Source: (Data for 2016-17 are the initial figures published by the AG Punjab)

CENTRAL TRANSFERS 2.24

The share of Central Taxes in total Receipts have increased from 9.32 % (2006-07) to 21.14 % (2016-17) indicating the State’s increasing dependence upon Central transfers and devolution during the 10 year period (Table 4). Also, the share of total Central Transfers in Revenue Receipts has grown from 22.66% (2006-07) to 31.50% (2016-17) as mentioned in Table 5.

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“…the transfer of

This trend of growing dependence on the Government

Grants in Aid from

of India for resources is also an indication of the lack of

Centre has

tax buoyancy within the State’s Own Tax Revenue

decreased from

streams and it needs to be addressed. However the

13.33% in 2006-07 to

transfer of Grants in Aid from Centre has decreased

10.36% in 2016-17…”

from 13.33% in 2006-07 to 10.36% in 2016-17 (Table 4). The primary reason for this is the lack of the State “…primary reason for

to provide its part of the share in Central Schemes. As

this is the lack of the

a result, the State has been unable to fully leverage the

State to furnish its

grants in aid from the Central Government.

part of the share in Central Schemes…”

Table 4: Share of Central Transfers (` crore) Year

Share of Central taxes

Grants in Aid from Centre

1

2

% of Central Tax to Total Revenue Receipts 3

% of Grants in Aid to Total Revenue Receipts 4

2006-07

1566

2240

9.32

13.33

2007-08

1975

2109

10.27

10.97

2008-09

2084

1695

10.06

8.18

2009-10

2144

2320

9.68

10.47

2010-11

3051

2399

11.05

8.69

2011-12

3554

2441

13.55

9.30

2012-13

4059

2776

12.66

8.66

2013-14

4431

3401

12.62

9.69

2014-15

4703

5870

12.05

15.04

2015-16

8009

4174

19.29

10.05

2016-17

9600

4704

21.24

10.36

Source: (State Budget Document and Finance Account of AG Punjab) Note: Data for 2016-17 are initial figures published by AG Punjab.

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“…It may not be

Table 5: Total Revenue Receipts (` crore) Year

States Receipts

possible to influence Central Transfers

Total Revenue Receipts (TRR)

Own Tax Revenue

Non Tax Revenue

Total State Receipt (1+2)

% to TRR (3/9)

Share of Central Taxes

Grants in Aid

Total Central Transfer (5+6)

% to TRR (7/9)

1

2

3

4

5

6

7

8

9

items like salaries, pension and interest Expenditure. But it is a different case with

2006-07

9017

3973

12990

77.34

1566

2240

3806

22.66

16796

2007-08

9899

5254

15153

78.77

1975

2109

4084

21.24

19238

2008-09

11150

5784

16934

81.75

2084

1695

3779

18.24

20713

Revenue Expenditure

2009-10

12039

5653

17692

79.85

2144

2320

4464

20.15

22157

net of Salaries,

2010-11

16828

5330

22158

80.26

3051

2399

5450

19.74

27608

2011-12

18841

1398

20239

77.15

3554

2441

5995

22.85

26234

Interest and

2012-13

22588

2629

25217

78.67

4059

2776

6835

21.32

32051

Pensions. This

2013-14

24079

3191

27270

77.78

4431

3401

7832

22.31

35104

component can be

2014-15

25570

2880

28450

72.91

4703

5870

10573

27.09

39023

2015-16

26690

2650

29340

70.66

8009

4174

12183

29.34

41523

2016-17

27818

3286

31104

68.50

9600

4704

14304

31.50

45408

regard to Non Plan

modulated without adverse impact on development. What

Source: (State Budget Document and Finance Account of AG Punjab) Note: Data for 2016-17 are initial figures published by AG Punjab.

has been its behavior during the last ten

STATE EXPENDITURE 2.25

years?…”

To understand the yawning Revenue gap as indicated by the widening Revenue Deficit, and the consequent crisis, one needs to examine both the Revenue and Expenditure side of State finances. While examining the growth in Revenue Expenditure, the trend in the various components of the Expenditure needs to be analyzed closely. It may be a truism that the Expenditure has to be contained within the limits of Revenue. It may not be possible to influence items like salaries, pension and interest Expenditure. But it is a different case with regard to Non Plan Revenue Expenditure net of Salaries, Interest and Pensions. This component can be modulated without adverse impact on development. What has been its behavior during the last ten years? This is the question that needs to be

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“…State’s Revenue Expenditure i.e.85% of total Expenditure is taken up by salaries,

REVENUE EXPENDITURE 2.26

The most fundamental classification of the government Expenditure is Revenue and Capital Expenditure. All

interest payments

Expenditure

and pensions…”

that

goes

towards

operation

&

maintenance, committed salary Expenditure and does not create any assets is called Revenue Expenditure

“…If we add the

and all Expenditure that creates long-term assets is

power subsidy and

called Capital Expenditure. The purpose of Capital

Expenditure on Police

Expenditure is to enhance the capacity of the economy

this together accounts

to produce goods and services through public

for 107% of the

investment in infrastructure like roads, bridges, power

Revenue Receipts of

generation

the State….”

networks,

and

distribution

transport,

capacity,

sewerage,

water

irrigation supply,

education, health, sports facilities, etc. In fact, Capital outlays must increase constantly in order to meet the growing infrastructure needs of a growing State like Punjab that spur development, increase consumption and thereby lead to greater tax Revenue for the State and a better quality of living for the citizens. 2.27

In 2016-17, 85% of total Revenue Receipts were incurred on salaries, interest payments and pensions. If we add the power subsidy, this together accounts for 102% of the Revenue Receipts of the State. These are committed liabilities of the Government that must be met each year.

2.28

If the components of Expenditure for the period 200607 to 2016-17 are analyzed, the Revenue Expenditure has increased from 88% to 92% (Figure 6 & 7) of the Total Expenditure.

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“…The average

Figure 6: Components of Expenditure (2006-07; ` crore)

salary of the Punjab Government employees is much higher as compared to the other States and even the Government of India…”

Source: (State Budget Document and Finance Account of AG Punjab)

Figure 7: Components of Expenditure (2016-17; ` crore)

Source: (Data for 2016-17 are the initial figures published by the AG Punjab)

2.29

Salary Structure and Expenditure: The average salary of the Punjab Government employees is much higher as compared to the other States and even the Government of India. No other State governments have such onerous obligations like Government of Punjab. On the other hand, the State spends merely 5.13% of its Revenue Expenditure on medical and public health, and 16.3% on general education.

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“…the State spends merely 5.13% of its Revenue Expenditure on medical and public health…”

2.30

The State Government is spending approximately 9.1% of its Revenue Expenditure as Expenditure on Police and Jails which is significantly higher as compared to larger States like Karnataka, Gujarat, Tamil Nadu, Haryana, and Uttar Pradesh.

Figure 8: Components of Revenue Expenditure (` crore)

Source: (State Budget Document and Finance Account of AG Punjab) Note: Data for 2016-17 are initial figures published by AG Punjab

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Chapter 2: State Finances

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2.31

Table 6 below shows the breakup of Revenue Expenditure in the State on the major components viz. Salaries, Pension and Interest and other Revenue Expenditure. The trend in increase of the State’s Revenue Expenditure shows

that

the

Revenue

“…The total Revenue Expenditure had been higher than the total Revenue Receipts for the decade under reference, thus

Expenditure has increased from `18544 crore (87.76%

indicating that the

of total Expenditure) in 2006-07 to `52018 crore

total Revenue

(92.18% of total Expenditure) in 2016-17 (an increase

Expenditure has

of 180%). During the same period, Expenditure on

grown faster than the

Salaries rose from `5783 crore to `19758 crore (an

Revenue Receipts,

increase of 242%), on pensions from `1905 crore to `8749 crore (an increase of 359%) and on Interest from

leading to an adverse Revenue situation…”

`4152 crore to `10098 crore (an increase of 143%). Thus the growing share of salary and pensions in its Revenue Expenditure prevented the State from achieving a Revenue surplus. With State’s borrowings and debt growing over time as indicated in Table 6, interest payments have also increased. The total Revenue Expenditure had been higher than the total Revenue Receipts for the decade, 2007-2017, thus indicating that the total Revenue Expenditure has grown faster than the Revenue Receipts, leading to an adverse Revenue situation.

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“…total Revenue

Table 6: Salaries, Pension and Interest Payments (` crore)

Expenditure has grown faster than the

Year

Revenue Receipts, leading to an adverse Revenue situation.”

Interest Payments

Pension Payments

Salaries & Wages

Total

Other RE

1

2

3

4 (1+2+3)

5

Total Revenue Expenditure 6 (4+5)

2006-07

4152

1905

5783

11840

6704

18544

2007-08

4527

2433

6438

13398

9664

23062

2008-09

4902

2830

6834

14566

10003

24569

2009-10

5011

3357

8225

16593

10815

27408

2010-11

5515

5309

9750

20574

12322

32896

2011-12

6280

5657

12403

24340

8705

33045

2012-13

6831

5966

14155

26952

12506

39458

2013-14

7820

6277

14862

28959

12681

41640

2014-15

8960

7249

16303

32512

14100

46612

2015-16

9782

7833

17437

35052

15022

50074

2016-17

10098

8749

19758

38605

13413

52018

Source: (State Budget Document and Finance Account of AG Punjab) Note: Data for 2016-17 are initial figures published by AG Punjab.

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Chapter 2: State Finances

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Figure

9:

Total

Revenue

Expenditure

(2006-07;

`

crore)

“…Government did not exercise adequate control on

Interest Payments, 4152, 23%

Other Revenue Expenditure, 6704, 36%

avoidable Expenditure...”

Pension Payments, 1905, 10%

Salaries & Wages, 5783, 31%

Source: (Data for 2016-17 are the initial figures published by the AG Punjab)

Figure 10: Total Revenue Expenditure (2016-17; ` crore)

Other Revenue Expenditure, 13413, 26%

Interest Payments, 10098, 19%

Pension Payments, 8749, 17%

Salaries & Wages, 19758, 38%

Source: (State Budget Document and Finance Account of AG Punjab)

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Chapter 2: State Finances

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“…If the State would have maintained the

2.32

It is thus observed that even in areas where prudent financial management would demand restraint and

same level of the

control; the previous Government did not exercise

growth in CAPEX in

adequate control on avoidable Expenditure. Evidently

the future, the State could have been

one of the factors that aggravated the financial crisis

among the best

during the tenure of the previous Government has been

States in terms of its

the failure to control avoidable Revenue Expenditure.

public infrastructure…”

CAPITAL EXPENDITURE 2.33

The trend of CAPEX (Capital Expenditure) during 200607 to 2016-17 is captured in the Table 7.

2.34

The share of Capital Expenditure has been showing a declining trend over the years, from 12.24% in 2006-07 to 7.82% in the year 2016-17. The Expenditure had fallen to as low as 4.61% in the year 2011-12. If the State would have maintained the same level of growth in CAPEX in the future, the State could have been among the best States in terms of its public infrastructure. But that was not to be….!

Figure 11: Revenue Deficit as % of GSDP (In %) 2.51

2.66 2.22

2.34

2.55

2.49 1.97

2.14

2.18

1.38

Source: (State Budget Document and Finance Account of AG Punjab)

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Chapter 2: State Finances

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“…The State will now

Table 7: Share of Revenue and Capital Expenditure (` crore) Year

Revenue Expenditure 1

% of Total Expenditure 2

Capital Expenditure 3

% of Total Expenditure 4

2006-07

18544

87.76

2586

12.24

2007-08

23062

91.32

2192

8.68

2008-09

24569

89.58

2858

10.42

2009-10

27408

92.68

2166

7.32

2010-11

32896

93.24

2384

6.76

2011-12

33045

95.39

1598

4.61

2012-13

39458

95.37

1916

4.63

2013-14

41640

94.98

2201

5.02

2014-15

46612

93.73

3118

6.27

2015-16

50074

94.24

3059

5.76

2016-17

52018

92.18

4412

7.82

have to wait longer for catching up with advanced States and that effort will now cost us more…”

Source: (State Budget Document and Finance Account of AG Punjab) Note: Data for 2016-17 are initial figures published by AG Punjab.

2.35

Thus, one consequence of the Fiscal issues is that the Capital Expenditure in the State has suffered hugely. The State will now have to wait longer for catching up with advanced States and such an effort will now cost us more. This indicates that the policy stance has been wavering

and

uncontrolled

growth

in

Revenue

Expenditure came in the way of a sustained growth of Capital Expenditure. On examining the rates of growth of these Expenditures in the period under reference, the growth of both Expenditures has been fluctuating widely. Unfortunately, as explained in Chapter 6, the Capital Expenditure incurred through off budget resources was also largely on non-resource generating assets, thus underlining poor planning and mispriorities in resource allocation of the previous Government.

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Chapter 2: State Finances

WHITE PAPER State Finances

“…As per the mandate of the 13th Finance Commission, the State was to

REVENUE DEFICIT 2.36

The excess of Revenue Expenditure over Revenue Receipts is defined as a Revenue Deficit, while an

achieve a zero

excess

Revenue Deficit from

of

Revenue

Receipts

over

Revenue

the year 2011-12

Expenditure is defined as a Revenue surplus. A

onwards…..”

Revenue Deficit implies that the State Government does not have sufficient funds to meet its committed Expenditures, the gap is met through borrowings, and accordingly fewer funds are available for productive and Capital Expenditure. 2.37

Revenue Deficit has hit its worst in the last ten years. In 2006-07 the Revenue Deficit was `1749 crore. However, this Deficit recorded more than two-fold increase in the very first year of the previous government coming into power i.e. 2007-08 at `3823 crore. It has since increased to `8550 crore in 2015-16 (Table 8) and the position is much worse in 2016-17 if we take into account the pending liabilities also of `13039 crore (Table 2) and initial figures for 2016-17 (Figure 11).

2.38

As per the mandate of the 13th Finance Commission, the State was to achieve zero Revenue Deficit from the year 2011-12 onwards, which has not been done. The State lost out a priceless and historic opportunity to catch up with the rest of the country in infrastructure investment by lowering the Revenue Deficit and increasing Capital Expenditure.

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Chapter 2: State Finances

WHITE PAPER State Finances

“…Fiscal Deficit of

Table 8: Trends in Revenue Deficit Year

`4384 crore was

Revenue (-) Deficit / Surplus

Revenue (-) Deficit / Surplus

(` crore)

as % of GSDP *

recorded in the year 2006-07, which has

2006-07

1749

1.38

2007-08

3823

2.51

2008-09

3856

2.22

`11762 crore in

2009-10

5251

2.66

2015-16…”

2010-11

5289

2.34

2011-12

6811

2.55

2012-13

7407

2.49

2013-14

6537

1.97

2014-15

7591

2.14

2015-16

8550

2.18

increased by 168% to

Source: (State Budget Document and Finance Account of AG Punjab) *Calculated on the basis of latest GSDP value provided by ESO, Punjab

FISCAL DEFICIT 2.39

The Fiscal Deficit means the excess of the total disbursements from the consolidated fund of the State (excluding repayment of debt) over total receipts excluding the debt receipts during a financial year. A declining Fiscal Deficit signifies a consolidation of the resource position and sustainable functioning of the Government. A Fiscal Deficit is usually financed by way of borrowings by the State. Fiscal Deficit of `4384 crore was recorded in the year 2006-07, which has increased by 168% to `11762 crore in 2015-16 (Table 9). If loans taken over by the State under UDAY scheme are included the Fiscal Deficit comes to `17359 crore. This trend indicates that the Government spending has been increasingly financed by raising loans (Figure 12).

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Chapter 2: State Finances

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“…Fiscal Deficit which was 3.02% of GSDP in 2007-08 has

Table 9: Trends in Fiscal Deficit Year

Fiscal Deficit (` crore)

Fiscal Deficit as % of GSDP**

risen sharply to

2006-07

4384

3.45

4.25% in 2015-16.

2007-08

4604

3.02

This trend indicates

2008-09

6690

3.84

that the Government

2009-10

6170

3.12

spending is being

2010-11

7143

3.16

2011-12

8491

3.18

2012-13

9346

3.14

2013-14

8790

2.65

2014-15

10842

3.05

2015-16*

11762

3.00

increasingly financed by raising loans…”

Source: (State Budget Document and Finance Account of AG Punjab) *Loans undertaken by the State Government under UDAY scheme is considered then the Fiscal Deficit amounts to `17359 crore and the Fiscal Deficit as % GSDP will be 4.25%. **Calculated on the basis of latest GSDP value provided by ESO, Punjab

Figure 12: Fiscal Deficit as % of GSDP (In %)

Source: (State Budget Document and Finance Account of AG Punjab)

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Chapter 2: State Finances

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2.40

A comparison of the Revenue Deficit and the Fiscal Deficit during the year 2006-07 and 2015-16 would reveal that while the Revenue Deficit was at 1.38% of the GSDP at the end of financial year 2006-07, it was

“…It clearly shows that though the State had larger Fiscal Deficit at the end of the year 2006-07 but

2.18% at the end 2015-16 (Table 8). The corresponding

the Revenue Deficit

figures for the Fiscal Deficit are 3.45% and 3%

was very less and,

respectively (Table 9). No doubt, the Fiscal Deficit at

therefore, the State

the end of the year 2006-07 was more than 3%, but at

Government could

same time the difference between Revenue Deficit and

spend money on the

Fiscal Deficit was 2.07% as against mere 0.82% of

Capital and

GSDP at the end of financial year 2015-16. It clearly

development

shows that though the State had larger Fiscal Deficit at

projects…”

the end of the year 2006-07 but the Revenue Deficit was very less and, therefore, the State Government had spent funds on the Capital and development projects. Correspondingly, during the year 2015-16, there was very little money left to spend on the development Expenditure after increased Revenue Expenditure. STATE DEBT LIABILITIES - OUTSTANDING DEBT 2.41

Debt Liabilities of the State inter-alia consist of Internal Debt of the State, Loans and Advances from Government of India and Public Account Liabilities. As the Tax Revenues are not able to finance the State’s entire Expenditure, over the years there has been a growing dependence on public debt as a major source of financing Government’s Expenditure. The main sources are: 1. Open Market Borrowings (OMB) 2. National Small Saving Fund (NSSF)

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Chapter 2: State Finances

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“…over the years

3. NABARD

there has been a

4. Government of India

growing reliance on

5. International Financial Institutions

public debt as a major

6. Commercial banks and other FIs

source for financing

7. Ways and Means Advances (WMA)

Government’s

8. Public Account

Expenditure…”

Table 10: Outstanding Debt to Total Revenue Receipts (` crore) Year

Outstanding Debt

Total Revenue Receipts (TRR)

Debt as %GSDP

16795

Outstanding Debt as % of TRR 305

2006-07

51155

2007-08

55982

19238

291

36.77

2008-09 2009-10

61850

20713

299

35.54

67971

22157

307

34.42

2010-11

74777

27608

271

33.06

2011-12

83099

26234

317

31.17

2012-13

92282

32051

288

30.99

2013-14

102234

35104

291

30.78

2014-15

112366

39023

288

31.66

2015-16

129441

41523

312

33.06

2016-17

148832*

45408

328

31.60

40.24

Source: (State Budget Document and Finance Account of AG Punjab) Note: Data for 2016-17 are initial figures published by AG Punjab. * Doesn’t include the other debts as indicated in Table 14(Total Debt)

Table 11: Outstanding Debt and Expenditure on Debt Servicing (` crore) Year

Net Borrowings

Interest Payments

Repayment of Loans

2006-07

-494

4152

1399

Debt Servicing (Interest + Repayment) 5551

Debt Servicing As % of TRR 33.05

2007-08

4579

4527

1719

6246

32.47

2008-09

4864

4902

1835

6737

32.53

2009-10

5648

5011

2283

7294

32.92

2010-11

6159

5515

2340

7855

28.45

2011-12

7564

6280

2675

9216

35.13

2012-13

8616

6831

3674

10505

32.78

2013-14

9422

7820

3650

11470

32.67

2014-15

9884

8960

3214

12174

31.20

2015-16

17486

9782

3830

13612

32.78

2016-17

16730

10098

4047

14145*

31.15*

Source: (State Budget Document and Finance Account of AG Punjab) Note: Data for 2016-17 are initial figures published by AG Punjab. *This figure is likely to increase sharply in 2017-18 on account of increased additional Debt Servicing of `3240 crore per annum on account of the clean term loan taken for the CCL of food account in March 2017.

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Chapter 2: State Finances

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2.42

The growth rate of the debt obligations over the period

“...The huge

as depicted in the Table 10, has risen from `51155 crore

Outstanding Debt of

in 2006-07 to `148832 crore in 2016-17. Though the

the State pre-empts

growth in Debt as percentage of GSDP has decreased from 40.24% to 31.15% (*doesn’t include other debts as mentioned in Table 14), but the underneath truth about the

significant resources of the State for debt servicing…”

corresponding growth in terms of GSDP in the same period has been hidden also this figure is likely to increase sharply in 2017-18 on account of increased additional Debt Servicing of `3240 crore per annum on account of the clean term loan taken for the CCL of food account in March 2017. The growth in GSDP has been more than two-fold and has risen from `127123 crore in 2006-07 to `427870 crore in 2016-17 (237%), meaning thereby, that while the people of the State have worked hard to increase the GSDP of the State, the government has mismanaged its finances increasing its debt stock. 2.43

The huge outstanding debt of the State pre-empts significant resources of the State for debt servicing. The total debt servicing Expenditure in 2016-17 was `14145 crore (Principal `4047 crore and Interest Payment `10098 crore – Table 11). This figure is likely to increase by 30% in 2017-18, on account of the increased debt liabilities of `29919.96 crore that the previous State government accepted in exchange for concealing the mismanagement of the food sector.

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Chapter 2: State Finances

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“…Borrowing to

2.44

finance present

As borrowings have increased over the years, the Government is also borrowing to repay old debts as is

consumption

evident from Table 11. In the past ten years, the

represented by non-

Government has used borrowings as a source of funds

plan Revenue

to meet a part of its committed Expenditure, which is

Expenditure…”

not a healthy sign. Borrowing by the Government is not undesirable per se, but these borrowings must be deployed largely for Capital Expenditure on resource generating assets as well as on social infrastructure for the debt to be sustainable in the long term. However, the trend of borrowings to finance present consumption represented by Revenue Expenditure is unsustainable in the long term as it does not produce future streams of income and still needs to be repaid. 2.45

Informal Debt: The informal debt is the amount of loans raised by the government internally from State Agencies. The State has taken these loans from the State agencies/ boards for meeting its Expenditure needs. This is in a way circumventing the provisions of the FRBM Act since this debt is never reflected in the accounts of the State Government. The details of funds borrowed through agencies for the year 2016-17 is depicted in Table 12.

Table 12: Borrowing from Agencies (2016-17; ` crore) Source of Debt PIDB PunGrain Housing & Urban Development PUDA Advance taken from Food Agencies to pay EMI’s (3 months) Total Source: (Concerned Departments)

Debt 1125 250 250 2000 810 4,435

Note: the State government is paying no Interest on these debts.

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Chapter 2: State Finances

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2.46

Another

discernible

aspect

is

that

the

previous

“…The informal debt

government had forced agencies and organizations of

is the amount of loans

the State like PIDB, PUDA, GMADA, RDB etc. to incur

raised by the

huge debt liabilities and fund Expenditures (many a times outside their mandate and mainly on non-resource generating assets) that should ordinarily be carried out by the State. These Expenditures were neither presented

government internally from State Agencies, which was `4435 crore in 2016-17…”

for the sanction of the Punjab Vidhan Sabha nor were these subject to the audit of the CAG. This aspect is being dealt separately in detail in subsequent pages.

CONTINGENT LIABILITIES & STATE GUARANTEES 2.47

Contingent Liability though, not an obligation to pay unless a certain discrete event(s) occurs and therefore often referred to as off-balance sheet

liability.

Contingent liabilities can be explicit or implicit. Explicit liability means specific obligations of the government that is established by law or a contract authorized by law. Implicit liability implies moral obligation or expected responsibility usually recognized after an event or condition is realized. These include: default of municipalities,

bank

failure

(bail-out),

deposit

insurance, failure of a non-guaranteed pension fund, natural disaster relief, etc. The guarantee commitments of State Government in respect of State public sector enterprises (SPSEs) are, in fact, a major source of potential risk to Fiscal and debt sustainability at the State level in general and in particular where SPSEs have accumulated huge losses and debt liabilities.

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Chapter 2: State Finances

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“…due to poor recovery of and non-

2.48

Various Public Sector Undertakings carry out projects for public interest. Sometimes these projects require

contribution to the

financing for which they approach financial institutions.

guarantee redemption fund has put the State

Usually financial institutions demand Government

Fiscal to a great

guarantee

risk…”

Institutions/banks reduce the rate of interest on the

as

a

collateral

security.

Financial

loans if government extends guarantee for the projects. 2.49

The Government guarantee is extended for the long term as well as short term loans. According to FRBM Act, there is a cap on extending guarantee on long term loans which is 80% of the total Revenue Receipts of previous year. Government also charges a guarantee fee @ 0.5% on the loan amount if loans are repayable within 1 year, 1% on the loan amount if loans are repayable within 3 years and 2% on the loan amount if loans are repayable after 3 years. In

terms

of

the

12th

Finance

Commission

recommendations, the State introduced the “Guarantee Redemption Fund Scheme” with an objective to meet its obligations arising out of the Guarantee extended to State level entities, so that this guarantee money should create a sinking fund to provide for the contingencies. Accordingly over the period 2013-14 to 2015-16, the State was required to contribute minimum amount of `1241.58 crore (Finance Accounts 2015-16 AG Punjab). However, poor recovery and noncontribution to the guarantee redemption fund, has put the State Fiscal to a great risk, and the State Government is now forced to bailout some of the SPSEs who had borrowed using State Guarantees.

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Chapter 2: State Finances

WHITE PAPER State Finances

“…poor recovery and

Table 13: Government Guarantees as on 31st March 2017

non-contribution to

1.

2.

3.

4.

Total Revenue Receipts for the year 2016-17

`45407.76 crore

Permissible Guarantee Limit (calculated @ 80% of the Revenue Receipts of the previous year)

`36326.20 crore

Total long term loans outstanding against govt. guarantees as on 31.03.2017

`20608.17 crore

Balance amount available for guarantees

the guarantee redemption fund, has put the State Fiscal to a great risk, and the State Government is now forced to bailout some of the SPSEs who had borrowed

`15718.03 crore

using State Guarantees…”

Source: (Collected from respective PSUs)

2.50

While the above figures may look healthy indicating a cushion for the State government to provide guarantees for debt that its enterprises may raise, the truth is that the guarantees provided earlier to PSPCL and the food agencies have now been converted to State debt as a result of the UDAY scheme and the loan takeover on account of CCL of food agencies by the State government. The long term loan raised by the State Government to settle the legacy CCL accounts of foodgrains amounting to `29919.96 crore have also been taken apart from `15628 crore under UDAY Bonds. This all adds up to `187452.96 crore (44% of GSDP). Taking altogether, the total debt including guarantees

comes

to

`208060.96

crore

which

constitutes 49% of GSDP (Table 14). However, as per the 14th Finance Commission recommendations, the outstanding debt as % of GSDP is required to be 25% during 2015-16 to 2019-20. Page | 53

Chapter 2: State Finances

WHITE PAPER State Finances

“…This all adds up to `187452.96 crore (44% of GSDP).

Table 14: Total Debt as on 31st March 2017 (` crore) Sr. No.

Particulars

Amount

1.

Outstanding Debt (including UDAY Bonds for 2015-16 & 2016-17)

2.

Informal Debt

4435.00

`208060.96 crore

3.

UDAY Bonds (for 2017-18)

4266.00

which constitutes

4.

Cash Credit Limit for Food grains Procurement

5.

Total Debt (1 to 4) (A)

187452.96

6.

Outstanding Guarantee

20608.00

7.

Total Debt + Guarantee (5+6) (B)

Taking altogether, the total debt including guarantees comes to

49% of GSDP…”

“…However, as per

148832.00

29919.96

208060.96

the 14th Finance Commission

Total Debt

= `187452.96 crore

recommendations,

GSDP

= `427870 crore

the outstanding debt

DEBT/ GSDP

= 44%

Total Debt & Guarantee

= `208060.96 crore

required to be 25%

GSDP

= `427870 crore

during 2015-16 to

(DEBT+Guarantee)/GSDP

= 49%

as % of GSDP is

A.

B.

2019-20...”

2.51

All this becomes more relevant when the budgeted Revenue Estimates are far behind the actual receipts. The shortfall between the actual receipts and the budgeted Revenue Receipts has been `2009 crore in 2010-11, `7562 crore in 2013-14 and `4773 in 201617 (Table 15). At the same time, the gap between the actual Capital Expenditure and the budgeted estimates has been much higher. This was as high as 70.51% in 2011-12 and 69.78% in 2013-14. However, it has been observed that the actual Capital Expenditure was higher than the budgeted Capital Expenditure only in 2006-07 (Table 16).

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Chapter 2: State Finances

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Similarly, the actual Expenditure against the budgeted estimates on plan allocations was 143.80% of the approved outlay in 2006-07, whereas the same has since been decreasing over the subsequent years. In

“…the budgeted Revenue estimates are far behind the actual receipts…”

the year 2009-10, this ratio declined drastically to 57.67%, which is the lowest in 10 years (Table 17).

Table 15: Revenue Receipts - Actual v/s Budgeted (` crore) Year

Budget Estimates

Actual

Shortfall

% shortfall

2007-08

23160

19238

3922

16.93

2008-09

24261

20713

3548

14.63

2009-10

26072

22157

3916

15.02

2010-11

29617

27608

2009

6.78

2011-12

32027

26234

5792

18.09

2012-13

38043

32051

5992

15.75

2013-14

42666

35104

7562

17.72

2014-15

44894

39023

5871

13.08

2015-16

46229

41523

4706

10.18

2016-17

50181

45408

4773

9.51

Source: (State Budget Document and Finance Account of AG Punjab) Note: Data for 2016-17 are initial figures published by AG Punjab

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Chapter 2: State Finances

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“…the actual

Table 16: Capital Expenditure- Actual v/s Budgeted (` crore)

Expenditure against Year

Budget Estimates

Actual

Shortfall

% shortfall

the budgeted estimates on plan

2006-07

2376

2586

-210

-8.83

2007-08

4174

2192

1982

47.49

2008-09

3483

2858

625

17.94

approved outlay in

2009-10

3550

2166

1384

38.98

2006-07…”

2010-11

3062

2384

678

22.14

2011-12

5418

1598

3820

70.51

2012-13

5815

1916

3899

67.06

10, this ratio declined

2013-14

7283

2201

5082

69.78

drastically to 57.67%,

2014-15

6066

3118

2948

48.60

which is the lowest in

2015-16

4857

3059

1797

37.01

2016-17

4804

4412

392

8.16

allocations was 143.80% of the

“…In the year 2009-

10 years...”

Source: (State Budget Document and Finance Account of AG Punjab)

Table 17: Plan Outlay - Actual v/s Budgeted (` crore) Year

Approved Outlay (BE)

Actual Expenditure

% of Approved Outlay

2006-07

4000.00

5751.83

143.80

2007-08

5111.00

5024.09

98.30

2008-09

6210.00

6925.00

111.52

2009-10

8625.00

4973.78

57.67

2010-11

9150.00

8325.00

90.98

2011-12

11520.00

7457.00

64.73

2012-13

14000.00

9684.90

69.18

2013-14

16125.00

11808.37

73.23

2014-15

20099.83

15030.03

74.78

2015-16

21173.90

20096.40

94.91

Source: (State Budget Document and Finance Account of AG Punjab)

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Chapter 2: State Finances

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“…the Expenditure

CONCLUSION

has been postponed while the receipts had been fast-forwarded through escrowing future Revenues …”

2.52

From the above, it is clear that the budgets have not been prepared very realistically. While the budget estimates on the receipt side have been exaggerated year after year as mentioned in Table 15, at the same time the actual receipt has been decreasing as compare

to

budgeted

figures.

Moreover,

the

Expenditure has been postponed while the receipts had been

fast-forwarded

through

escrowing

future

Revenues while incurring debt and leaving huge unpaid liabilities in the treasury for the coming year.

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Chapter 2: State Finances

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Chapter 3: Liability Of Cash Credit Limit For Food Grains

WHITE PAPER State Finances

LIABILITY OF CASH CREDIT LIMIT FOR FOOD GRAINS

Chapter 3

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Chapter 3: Liability Of Cash Credit Limit For Food Grains

WHITE PAPER State Finances

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Chapter 3: Liability Of Cash Credit Limit For Food Grains

WHITE PAPER State Finances

LIABILITY OF CASH CREDIT LIMIT FOR FOOD GRAINS Chapter 3

3.0

Punjab is the major contributor of food grains towards Central Pool in the country, contributing about 40% of the nation's requirement. Procurement of more than 250 Lakh metric tonnes of food grains is undertaken in Punjab through State Procuring Agencies and FCI every year.

3.1

In Punjab, Wheat & Paddy is procured in a short span of

“…The procurement

about 30 days during the season in about 1800 mandi

of wheat and paddy is

yards. Processed rice is delivered in a time span of about

made under Price

4-5 months from about 3200 rice millers in the State. The

Support Scheme

procurement of wheat and paddy is made under Price

(MSP) of

Support Scheme (MSP) of Government of India and the

Government of India

finances for carrying out the same are made available by

and the finances for

way of Cash Credit Limit authorized by Reserve Bank of

carrying out the same

India through State Bank of India and the consortium

are made available by

bankers. State Government procures food grains through

way of Cash Credit

its five State Procuring Agencies (SPAs), on behalf of

Limit authorized by

Government of India.

Reserve Bank of India through State

3.2

Before the start of every procurement season, a

Bank of India and the

“provisional cost sheet” is issued by Department of Food &

consortium

Public Distribution (DFPD), Government of India, based on

bankers...”

norms introduced first by Department of Food & Public Distribution, Government of India in 2003, on the basis of which FCI makes payment of delivered food grains to State Procuring Agencies.

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“…Government of

3.3

India used to

The Provisional Cost Sheet comprises items such as MSP, Statutory

reimburse the actual

Charges

Transportation

expenditures on

&

and

Taxes,

Handling

Labour

Charges,

Charges,

Custody

&

Maintenance Charges, Interest Charges, Milling Charges,

procurement

Administrative Charges and Cost of Gunny Bags. However,

incidentals in lumpsum manner and

the actual costs incurred by the SPAs during procurement

never used to call for

operations, except MSP & Statutory Charges and Taxes,

the audited

are invariably more than what is provided for in the

accounts...”

provisional cost sheets. Each crop's provisional cost sheet is required to be finalized on the basis of audited Final Accounts of the SPAs. The actual procurement expenses incurred by SPAs, except MSP, Statutory Charges & Milling Charges, are partially reimbursed by the FCI based on the provisional cost sheet issued by the Government of India. The payment of actual Procurement Expenses is made by SPAs from the CCL account only, as the SPAs have no other source of funds for procurement operations. 3.4

Prior to 2003-04, Government of India used to reimburse the actual expenditures on procurement incidentals in lumpsum. However, from 2003-04 onwards it was decided that the difference between the actual expenditure and provisional cost sheet would be reimbursed on the submission of audited accounts duly audited by statutory auditors and CAG. Since the lifting of the food grains by the FCI procured by the SPAs used to take 2 to 3 years, as such the audited accounts could not be submitted to Government of India. However, the duly audited accounts of 2003-04 were submitted to Government of India from 2009 onwards in a phased manner and Government of India started processing such accounts from 2011.

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3.5

It is pertinent to note that in-spite of settling the accounts as per the audited expenses, the Government of India did not reimburse the entire claim of expenses

“…The gap between the outstanding CCL and the stocks in hand has been

incurred on procurement of food grains by the State

increasing gradually

Procuring Agencies. Due to non-reimbursement of the

in the past…”

actual expenses of each crop, the gap has been increasing with the application of compounded interest, besides non-settlement of other critical issues. The State Government did not make any budgetary provision for adjustment of such a gap, which has now been made by the State during KMS 2015-16, whereby the State has deposited `926 crore for the adjustment of KMS 2015-16 accounts. The gap between the outstanding CCL and the stocks in hand has been increasing gradually in the past. The current Bank outstanding as on 31.3.2017 in the Food Credit Account (without taking into account the available stocks of food grains with SPAs) is `29919.96 crore. 3.6

For arrangement of funds for procurement operations, the State Government approaches the RBI for authorization of Cash Credit limit, to be availed through SBI, which is the lead bank of the Food Credit Consortium. The CCL and interest accrued thereon should in the normal course be fully adjusted as and when food grains are lifted by the Food Corporation of India and its reimbursement is made by them. However, no account could be shown to be fully adjusted after the delivery of grains to FCI of the same crop since inception up to 2014-15 (i.e. the Legacy period).

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“…The provisional

3.7

cost sheet never

It is also an admitted fact that the accounts of the previous crop accounts used to be adjusted by the

matched the actual

Bank from the receipts of the next crop CCL, leaving

expenses incurred by

gap holes in adjustment of the current crop account,

the State for the

and this cycle has unfortunately continued for the

procurement of

period of the legacy accounts. As a result, it was never

concerned crop…“

clear either to the SPAs or the Bank as to the adjustment of that particular crop year, as inflows of future crop seasons used to be appropriated by the Banks to adjust interest accumulations of previous year accounts, and no attempt was made by the Bank/ Government of India, which releases the provisional cost sheet for each crop, to clear the accounts of a particular Food season for which CCL was sanctioned. The provisional cost sheet never matched the actual expenses incurred by the State for the procurement of concerned crop. Even the method of ‘valuation of stocks’ issued by the Reserve Bank of India is not accurate and requires amendments. On this subject, State Government has taken up the matter with Government of India from time to time, but no change in the valuation norms has been carried out so far. 3.8

If the reasons for spiraling legacy accounts are analyzed, it becomes evident that it is mainly due to non-rational and faulty Principles of Procurement Incidentals, leading to a huge gap on account of difference in rates in provisional cost sheet and the actual expenses, compounded by burgeoning interest, besides some other unresolved issues like:

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a. Carry over charges on stock in hand; b. Reimbursement of loss suffered by the State agencies on disposal of damaged/ rejected wheat stocks of crop 1995-96 till 2003-04;

“…Nonreimbursement of difference between simple interest paid by the Government of

c. Non-payment of interest on I.D. Cess differential and Purchase Tax;

India in incidental charges, and

d. Interest of delayed payments by FCI and penal interest

compounded interest being charged on

1999-2000 to 2001-2002; e. Non-reimbursement of handling and transport charges on wheat exported directly by the State Agencies; f. Non-reimbursement of losses suffered by the State due to open-market sale of paddy in crop year 1994-95 (as

quarterly /monthly basis from the year 1997-98 to 200001...”

per Government of India instructions); g. Non-reimbursement of difference between simple interest paid by the Government of India in incidental charges, and compounded interest being charged on quarterly /monthly basis from the year 1997-98 to 200001; h. Unilateral deductions carried out by FCI based solely on CAG audit paras of FCI; i. Non-inclusion in the stock Statements of receivables against delivery of food grains, for the purpose of calculation of drawing power of the account; j. Time period involved in finalization of incidental charges as reflected in the Final Cost Sheet; k. Method of valuation of stocks, as per norms fixed by the RBI, leading to a sharp decreased in valuation of balance stock; l. Delay in taking over of the stocks by FCI; m.Delay in movement of stocks by FCI out of the State of Punjab;

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“…The claims of

n. Non-payment of interest on delayed payments by FCI

actual expenses for

even after taking over of stocks.

the year 2003-04 were not submitted to

Government of India till 2009…”

3.9

Historically speaking, the gap in Food Credit Account as on 31-10-2004 was `8160.92 crore. At that time, the Department of Food Supplies, Government of Punjab which was authorized to procure food grain with four other SPAs, stopped procurement of food grains on its own account, so as to avoid the gap in CCL on government account, but the gap in CCL accounts of the procurement agencies continued even after the conversion of `4545 crore of outstanding of the Food Department account from CCL to term loan in the year 2004. The term loan along with interest was regularly repaid by the State Finance Department, but the gap of SPAs continued and has been continuously increasing year after year as the core issues of gap could not be conceptualized and quantified, because the actual implication of change in procurement principles could not be recognized in the absence of final claims. The claims of actual expenses for the year 2003-04 were not submitted to Government of India till 2009 and DFPD, Government of India, started processing these claims in January 2011. The State Government has started submitting claims after completion of the balance

sheets

year

by

year.

However,

the

Government of India did not reimburse the entire expenses and also declined to pay interest which SBI was charging on the difference of actual and provisional expenses.

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3.10

From RMS 2015-16, the accounts of the Food Credit were ‘ring-fenced’ on the request of Government of Punjab, as to understand the reasons for formation of the seasonal gap. After proper ring-fencing of CCL

“…All the policy issues and pending issues were discussed in detail in the meeting of 5

account, the Government of Punjab was able to

members Joint

showcase the reason and causes of the gap in CCL.

Committee

There was a gap of about `2200 crore in CCL account

constituted by PMO

of KMS 2015-16. Out of `2200 crore, `1100 crore was

on 27.08.2015…”

due to diversion of funds by SBI on account of interest adjustment on previous year CCL accounts, and a gap of about `1100 crore was present on account of the difference in actual expenses and the provisions as contained in the provisional cost sheet issued by DFPD on the basis of extant Principles of Procurement Incidences (PPI) norms. 3.11

Considering the situation, the Government of India advised Government of Punjab to make a budgetary provision for the gap amount so as to stop further increase in gap and to stop the recurring interest burden. Acting on the advice of Government of India, the Finance Department has released an amount of `926 crore to square up the gap in CCL account for KMS 2015-16. Further, the State Finance Department has made a budgetary provision of `1100 crore in the year 2016-17 to temporarily plug any gaps in the KMS 2016-17, so as to avoid interest burden, and ensure repayment to Bank.

3.12

The policy and pending issues were discussed in detail in the meeting of the 5 members Joint Committee constituted by PMO on 27.08.2015, and the Joint Committee gave its report on 22.02.2016.

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“…The problem of

Although the Joint Committee was set up by the PMO,

gap is accentuated

the reports of its recommendations were never sent to

further by interest

the PMO for appraisal or concurrence, even though

accumulation.”

huge liabilities of both the Government of India and Government of Punjab were in contention, and the DFPD proceeded to take suo-moto action on the report at its own level. The Committee had recommended in Chapter 9 of its Report to re-examine some issues of the Government of Punjab. Further, some policy issues were conceded in favour of the State Government, however

the

Committee

observed,

perhaps

erroneously, that at this point of time these issues can be settled with prospective effect only and thus, the problem remained as such. 3.13

It is pertinent to mention that the DFPD has over time partially amended some of the PPIs (Principles of Procurement Incidentals), but many others are still required to be suitably amended as requested by Government of Punjab from time to time. Despite these amendments, the food procurement operations by the SPAs remain a loss making venture/operation. No doubt that State is getting several taxes on procurement of food grains. The difference between the actual costs incurred in procurement operations, and the costs reimbursable as per the PPIs as contained in the Provisional Cost Sheet is the main reason of losses to the State Agencies. The problem of gap is accentuated further by interest accumulation. There is an urgent need for rationalization of PPI so as to ensure equitable reimbursement of actual expenses during food procurement operations.

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3.14

It may be appraised that the entire burden of settlement of outstanding accounts couldn’t have been put squarely

3.15

on

Punjab

Government

without

any

“….the State Government requested the Government of India

contribution coming from Government of India or the

to extend one time

Banks. However, the previous government accepted

grant-in-aid of

the same, burdening the citizens with a huge debt.

`10000 crore and,

As the procurement season for paddy (KMS 2016-17)

pending settlement of

was arriving and the State Government was finding it

the claims of the

extremely difficult to get CCL from the Banks and to

State agencies.”

keep the procurement operations smooth, the State Government

held detailed discussions

with the

consortium of banks led by SBI and decided to go for short term loan purely as a stop gap arrangement. To sort out the problem in the long run, the State Government requested the Government of India to extend one time grant-in-aid of `10000 crore and, pending settlement of the claims of the State Agencies, the balance will be taken care of State Government by raising money by floating bonds. After detailed round of discussions the following terms and conditions were mutually agreed with the Bank.

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Tab le 18: Terms o f Ag reement of CCL S r. No.

P aramet er

T erm s of San ct ion

1

Amount

31,000 core (approx. outstanding of the legacy accounts as on dat e of c ommencem ent)

2

Tenure

20 Years

3

Repayment

Equated Half yearly installments, first falling due on 31st Jan 2017 and thereafter at the end of every six months. This was subsequently changed to monthly (EMI)

4

Repayment Frequency/ Installment Amount

Half yearly installment amount including interest and Principal i.e. ` 1615 crore

5

Interest Rate

8.25% p.a. (Fixed ) monthly rests not linked to MCLR

6

Interest Reset

Fixed Rate not linked to MCLR, interest rate if subject to review at the end of each 5 years.

7

Credit Enhancement

(i) Government of Punjab to irrevocably authorize Government of India to deduct, in case Government of Punjab fails to make any payment towards principal or interest on due dates. Such defaulted amount from the net small savings collections or (on share in central taxes and normal central assistance in that order of priority and pay the same to consortium ( ii) Government of Punjab shall also ensure that Government of India issues a Comfort letter to lenders in this regard (iii) In the event of default on the part of Government of Punjab to pay any installment on due date a demand may be made on Government of India under intimate to Government of Punjab for payment of defaulted amount

8

Security Documentation

Suitable security documents to be executed by authorized and empowered official of Government of Punjab. It would be incumbent upon Government of Punjab to secure and obtain all the in-house / legislative approvals in this respect.

9

RBI dispensation

The following one-time consideration would be requested from the Regulators. The exposure will not be treated as Restructured due to – (a) conversion of the existing out standings into clean term loan (b) providing finer pricing Approval would be sought from Government of India regarding the arrangement (credit enhancement)

10

Government of India Approval

11

Government of Punjab Consent

Government of Punjab would make available its unconditional consent to the arrangement, including the credit enhancement proposed, before the disbursement of CTL.

12

Penalty

No penalty would be chargeable for prepayment or accelerated payment of the exposure

13

Pre-Payment

Any Payment received from Government of India/ FCI/ liquidation of stocks will be adjusted for reduction of out standings without impacting the installments which are due and payable. Bank shall have the right to adjust such prepayment in such other manner as decided in the standing committee.

14.

Other Conditions

Government of Punjab Shall Seek fresh disbursement from Banks only after compliance of the above conditions. RBI approval is a pre-condition for the disbursement of CTL

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3.16

For availing a Clean Term Loan, a request was made to the Government of India for getting necessary approval as per FRBM Act under article 293(3) of Constitution of India. While the necessary approval was

3.17

“…in case Government of Punjab fails to make any payment towards principal or interest of

awaited, in the meantime, State Bank of India submitted

the Clean Term Loan

Clean Term Loan agreement to be signed before the

on due dates, such

31.12.2016 to avoid the slippage of these accounts in

defaulted amount

NPA; the same was signed on 31.12.2016, pending

shall be deducted

approval of Government of India.

from Government of

The Government of India issued its consent on

Punjab’s Share in

02.01.2017 stipulating as follows: “Government of

Central Taxes”

Punjab shall approach Budget Division, Department of Economic Affairs, for executing a tripartite agreement between Government of India and RBI, irrevocably authorizing the Government of India to deduct, in case Government of Punjab fails to make any payment towards principal or interest of the Clean Term Loan on due dates, such defaulted amount shall be deducted from Government of Punjab’s Share in Central Taxes and pay the same to SBI consortium”. 3.18

In compliance of the conditions in the consent, a Tripartite agreement received from the State Bank of India was sent to the Government of India. Further, Government of Punjab made request for amendment in the Terms and Conditions in the Clean Term Loan on 06.01.2017 detailing as follows: a.

Actual amount of disbursement would be about `30583.41 crore against the sanction of `31000 crore. Accordingly the amount of installment may be refixed as per actual amount.

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“…Banks have

b. As the amount of installment is very huge, the installment

agreed for EMI @

on monthly basis instead of half-yearly basis may be

`270 crore and

made. While doing so, due credit may be given to State

converted the legacy

Government due to early payment of installments.

CCL accounts to

c. As the Banking Industry has reduced the lending rate by

Clean Term Loan. As

0.9% after demonetization, the rate of Interest on Clean

regards the reduction

Term Loan was required to be reduced further from

in rate of interest, the

8.25% to 7.35%.

Banks are yet to agree...”

3.19

In this regard, meeting was held with State Bank of India on 21.01.2017 at New Delhi with consortium of Banks, on 27.01.2017 with standing committee of the consortium and Reserve Bank of India for discussion on the request of Government of Punjab. In this meeting consortium of banks agreed to above, subject to the approval of Reserve Bank of India.

3.20

Subsequently, Banks have agreed for EMI @ `270 crore and converted the legacy CCL accounts to Clean Term Loan. As regards the reduction in rate of interest, the Banks are yet to agree.

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“…It is shocking to know that this was done, even without the elementary precaution of going into the reasons for the emergence of

CONCLUSION 3.21

Despite being the granary and food bowl of the nation, the State has been incurring huge losses in procuring food grains on behalf of the Government of India and ensuring food security of the nation. On account of

such a huge gap and

ineffective presentation of the State’s claims by the then

fixing responsibility of

Government, the citizens of the State have been

the concerned

burdened with an additional debt of `29919.96 crore

officials of the state

implying an additional annual debt servicing liability of

procurement

`3240 crore which would have otherwise been used to

agencies. The alacrity

build social and physical infrastructure. It is shocking to

with which this was done not only provided a convenient cover to the various acts of malfeasance,

know that this was done, even without the elementary precaution of going into the reasons for the emergence of such a huge gap and fixing responsibility of the concerned officials of the state procurement agencies.

but the urgency to

The alacrity with which this was done not only provided

recover the due

a convenient cover to the various acts of malfeasance,

amount from the

but the urgency to recover the due amount from the

Government of India

Government of India and the opportunity to strike a fair

and the opportunity to

bargain with them and the banks was also lost. The

strike a fair bargain

then Government also agreed to square-up any gap

with them and the

between the outstanding CCL and value of stock that

banks was also lost…”

might emerge in the future as well. This is against the cardinal principle of the Centralized Procurement Scheme that the State Procuring Agencies being agents of the Government of India are neither to make any profit nor to incur any loss in the procurement operations and the Government of India is expected to reimburse all bona fide cost of procurement incurred by them.

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Chapter 4: Financial Burden On Account Of Uday Scheme

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FINANCIAL BURDEN ON ACCOUNT OF UDAY SCHEME

Chapter 4

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Chapter 4: Financial Burden On Account Of Uday Scheme

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Chapter 4: Financial Burden On Account Of Uday Scheme

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FINANCIAL BURDEN ON ACCOUNT OF UDAY SCHEME Chapter 4

UJWAL DISCOM ASSURANCE YOJANA (UDAY) 4.0

Ministry of Power, Government of India notified a scheme for financial turnaround of power distribution companies (DISCOMs) in 2015 with an objective to improve the operational and financial efficiency of the State DISCOMs.

“…The Borrowings

Memorandum of Understanding (MOU) amongst Ministry of

made by the state to

Power, Government of India, Government of Punjab and

takeover PSPCL debt

Punjab State Power Corporation Limited (PSPCL) was

during 2015-16 and

signed on 04.03.2016, containing the following:

2016-17 shall be

a. Out of the total outstanding debt of PSPCL of

utilized by Government of Punjab solely for the purpose of

`20837.68 crore on 30.09.2015, state was to take over `15628.26 crore (75% of total debt on 30.09.2015) in two years i.e. 50% of the outstanding debt (`10418.84

discharging the

crore) in 2015-16 and 25% of the outstanding debt

PSPCL debt and

(`5209.42 crore) in 2016-17. For the remaining 25% of

transfer to PSPCL as

debt (`5209.42 crore), PSPCL shall fully/partially issue

a mix of grant, loan or

State Government guaranteed bonds or get them

equity…”

converted by Banks/FIs into loans or bonds with interest not more than Banks base rate plus 0.1%. b. The Borrowings made by the state to takeover PSPCL debt during 2015-16 and 2016-17 shall be utilized by Government of Punjab solely for the purpose of discharging the PSPCL debt and transfer to PSPCL as a mix of grant, loan or equity as described in the following table.

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“…the rate of interest at which state shall be issuing Bonds for

Table 19: PSPCL debt and transfer to PSPCL (` Crore) Year

Total Debt Taken Over

1

50% of the total debt

10418.84

10418.84

2

25% of the total debt

5209.42

15628.26

discharge of PSPCL's debt shall be less by

Transfer to Punjab PSPCL in the form of Grant

Transfer to Punjab PSPCL in the form of Loan

about 3 – 3.5% from the rate of interest of PSPCL's existing debt...”

Transfer to Punjab PSPCL in the form of Equity

Outstand ing State Loan of Punjab PSPCL

3

15628.26

4

15628.26

5

11728.26

3900.00

Source: (PSPCL)

c. PSPCL shall be saving only on account of reduced interest rate up to 2019-20 as the rate of interest at which state shall be issuing Bonds for discharge of PSPCL's debt shall be less by about 3 – 3.5% from the rate of interest of PSPCL's existing debt. The expected savings on account of interest till 2019-20 is expected to be around `600 crore per annum. However, from the year 2020-21, the saving on account of interest to PSPCL shall be more as the entire loan of `15628.26 crore will be converted into grant and equity. d. PSPCL is required to undertake certain measures to reduce its AT&C losses to 14%

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e. All outstanding dues from the State Government departments to PSPCL for supply of electricity shall be paid by 30.03.2016. 4.1

“…It is mentioned that interest payment will be paid by the state government even for

Accordingly, Government of Punjab has issued Punjab

the first four years...”

Special Bonds amounting to `15628.26 crore during 2015-16 & 2016-17. 4.2

PSPCL shall pay interest to the Government of Punjab on the outstanding loan in a financial year at the rate at which the Government issued non–SLR bonds up to 2019-20. However, Government of Punjab will make the payment of interest and principal after 2019-20.

4.3

Further, a back to back agreement has been signed by Government of Punjab with PSPCL under which PSPCL

will

pay

the

interest

and

principal

to

Government of Punjab after the financial year 2019-20. 4.4

As regards the balance `5209.42 crore (25% of outstanding debt of `20837.68 crore of PSPCL as on 30.09.2015), PSPCL was to issue Government Guaranteed DISCOM Bonds. Government of Punjab approved providing for State Government guarantee for issue of Bonds amounting to `5209.42 crore including interest thereon subject to a cap of 10% on rate of interest and on the terms specified by Finance Department of Government of Punjab.

PSPCL has

invited bids for issue of DISCOM Bonds, but no response has been received in this regard. 4.5

It is mentioned that interest payment will be paid by the State Government even for the first four years but the same would be adjusted out of subsidy payable to PSPCL. Annual liability on an average is `1300 crore in initial 5 years and `2800 crore during next 5 years

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“…The interest burden on account of the floating of these

or so and about `1200 crore in next 5 years. 4.6

Punjab Government has floated UDAY bonds of the order of `15628.26 crore in March/April 2016 on the

bonds has already been added to the

directions of Government of India. The interest burden

burden of State

on account of the floating of these bonds has already

Government...”

been added to the burden of State Government. This, along with the financial burden of servicing of interest on the bonds to be raised for settlement of outstanding CCL accounts, is likely to be huge. In addition, there will also be liability towards repayment of principal amount of both UDAY bonds as well as CCL bonds. 4.7

It must be mentioned that PSPCL has been running into losses from its very inception. It made nominal profits only for 3 years, from the year 2012-13 to 2014-15 and again slipped into losses during the year 2015-16. It suffered losses of `1695 crore during the year 2015-16 and has accumulated losses of `3196 crore as on 31.03.2016. The debt profile and statement of interest payments is mentioned in Annexure IV.

CONCLUSION 4.8

Accumulation of interest burden on account UDAY Bonds along with servicing of interest on the bonds raised for the settlement of CCL account, together has led to further increase the burden of State’s committed liabilities. This huge debt liability, pre-empt significant resources of the State.

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PUBLIC SECTOR UNDERTAKINGS

Chapter 5

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Chapter 5: Public Sector Undertakings

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Chapter 5: Public Sector Undertakings

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PUBLIC SECTOR UNDERTAKINGS Chapter 5

5.0

There are 55 (29 Boards + 26 Corporations) Public Sector Undertakings (PSUs) of Punjab Government. In addition, there are some Co-Operative Apex Institutions and Authorities such as MARKFED, SUGARFED, MILKFED, HOUSEFED, Punjab State Co-operative Bank, Punjab State Co-operative Agriculture Development Bank, in which

“…The total amount

Punjab Government has stake in form of equity or debt. The

of equity in these

total amount of equity in these PSUs and Cooperative Apex

PSUs and

Institutions is `8234.30 crore. The total amount of

Cooperative Apex

outstanding Government loans of these entities is

Institutions is

`17030.92

`8234.30 crore…”

crore.

The

outstanding

loans

of

other

Institutions were `22593.95 crore, and loans of `20608.17 crore was outstanding against Government guarantee. In

“…loans of

case of default, it is the bounden duty of the State

`20608.17 crore was

Government to repay these loans to the lenders (Annexure

outstanding against

V, VI & VII).

Government guarantee…”

5.1

The State Government had decided that the PSUs and Apex Co-operative Institutions should give at least a modest return of 5% on the equity invested by the State Government. However, none of the PSUs except Punjab Small Industries and Export Corporation, CONWARE, Punjab State Forest Development Corporation Ltd. and Punjab State Co-operative Agricultural Development Bank have paid any return up to 31.03.2016.

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“…The cumulative

The Government received only a small amount of `4.01

losses of the

crore during the year 2015-16 as dividend on a huge

Corporation are

investment of `8234.30 crore in these PSUs and Co-

`386.94 crore

operative Institutions.

(provisional) up to 2015-16. The

5.2

The finances of some of the major Public Sector

financial position of

Undertakings of the Government, namely PRTC, PSIDC,

PRTC is so weak that

MARKFED, PUNSUP, PAIC, PUNGRAIN, PSWC, PFC,

it is not even able to

SUGARFED and PUDA are analyzed below.

fully pay the taxes...”

PEPSU ROAD TRANSPORT CORPORATION (PRTC) 5.3

PEPSU Road Transport Corporation (PRTC) is a Public Sector Undertaking which was set up in 1956 and at present has a fleet of 1056 buses. Government of Punjab has invested `307.08 crore as Equity Share Capital and has also given loan to PRTC, out of which `23.75 crore is outstanding as on 28.02.2017. PRTC is suffering from chronic losses. The average losses of PRTC ranged between `7 crore to `15 crore from the year 2005-06 to 2015-16. The cumulative losses of the Corporation are `386.94 crore (provisional) up to 2015-16. The financial position of PRTC is so weak that it is not even able to fully pay the taxes that it collects and is liable to transfer to the State Government. As on 31.3.2017, it has pending arrears of `197.62 crore to be paid to the State on this account only.

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PUNJAB

STATE

INDUSTRIAL

DEVELOPMENT

CORPORATION LTD. (PSIDC)

“…PSIDC was unable to service the debt it had incurred as part of its operations the

5.3

Punjab State Industrial Development Corporation Limited

Government had

(PSIDC) was incorporated in 1966 to act as a catalyst for

given guarantee(s) to

the development of large and medium scale industries in

the Corporation for

Punjab. In 1976, PSIDC was also declared as a second

raising funds through

state level financial institution under the Refinance Scheme

private placement of

of IDBI/SIDBI. The Corporation thus combined in itself the

bonds and interest

role of Institutional promoter & investor, term lender and

payments thereof...”

Facilitator for Mega Project. Since PSIDC was unable to service the debt it had incurred as part of its operations, the Government had given guarantee(s) to the Corporation for raising funds through private placement of bonds and interest payments thereof. The total bonds of `1717.38 crore were raised out of which `606.46 crore are outstanding on account of principal and `125.10 crore is outstanding on account of interest on these bonds as on 31.03.2017. Out of the outstanding principal of `606.46 crore, `324.20 crore is due for the payment as on 31.03.2017 and PSIDC is not able to pay the due principal amount of bonds. 5.4

The Corporation had been making profits till the year 199495.

Thereafter, the Corporation slipped into losses. It

suffered loss of `14.07 crore during the year 2015-16. The accumulated losses of the Corporation as on 31st March, 2016 are `707.83 crore, thereby wiping off its entire net worth. The reasons for the losses are mainly lower recovery of interest dues, scheduled disinvestments not taking place and high financial charges on account of interest on bonds.

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“…If PSIDC fails to come out of the

5.6

As on 31.03.2017, PSIDC is a defaulter in the repayment of bonds aggregating `324.20 crore and interest of

present situation, the

`125.10 crore on these Bonds. Apart from this, PSIDC has

due/outstanding principal and interest

also not paid guarantee fee of `26.63 crore as well as

amount of Bonds

stamp duty of `8.62 crore. The Corporation has received

secured by

legal notices from about 42 companies, out of which 6

Government

companies have already filed suit before Hon’ble Punjab &

guarantee of about

Haryana High Court for recovery of their dues and winding

`731 crore shall

up of the Corporation. The above mentioned liabilities of

devolve on the State

PSIDC are in dangerous zone. The bonds and the interest

Government further

thereon are guaranteed by the State Government. If PSIDC

straining its

fails

precarious

to

come

out

of

the

present

situation,

the

due/outstanding principal and interest amount of Bonds

finances...”

secured by Government guarantee of about `731 crore shall devolve on the State Government further straining its precarious finances.

PUNGRAIN 5.7

PUNGRAIN

was

established

in

March,

2003

for

procurement of Food Grains (Wheat & Paddy) for Central/State Pool. State government has invested `1.05 crore in PUNGRAIN in the form of equity. PUNGRAIN has raised `164.65 crore as loans from banks. Loans to the tune of `6813.05 crore raised against Government Guarantee are outstanding as on 28.02.17. Due to partial reimbursement of incidental Charges by FCI, PUNGRAIN is suffering heavy losses. The losses for the year 2014-15 amounted to `370.76 crore and the accumulated losses of PUNGRAIN as on 31.03.15 are `2312.19 crore.

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“…The accumulated

PUNJAB FINANCIAL CORPORATION (PFC) 5.8

Punjab Financial Corporation

was

losses of PFC as on

incorporated

on

01.02.1953 under the State Financial Corporations Act 1951, with the main objective to grant loans for the

31.03.2016 are `268.35 crore. PFC is a defaulter in the repayment of `123.15

establishment of new micro, small & medium scale

crore on account of

industrial units, modernization, expansion/ diversification of

Bonds and interest

existing units in the State of Punjab. Punjab Government

thereon. The bonds

holds `29.31 crore Equity Share Capital of PFC, out of total

and the interest

equity of `40.39 crore. Loan given by Punjab Government

thereon are

to PFC amounting to `16.53 crore is outstanding as on

guaranteed by the

31.03.2016. State Government stands as a guarantor to the Bonds of `250 crore issued by PFC. The outstanding amount of Bonds on account of principal is `172.26 crore

State Government. If PFC fails to come out of the present situation, the

and `23.66 crore is outstanding as interest on these

due/outstanding

Bonds. Due to decline in the growth of industries in Punjab,

principal and interest

high cost of borrowings, loss of interest due to sacrifice of

amount of Bonds

interest on various OTS policies of State Government, the

secured by

Corporation is running into losses, resulting into weak

Government

financial health of PFC. The accumulated losses of PFC as

guarantee shall

on 31.03.2016 are `268.35 crore. PFC is a defaulter in the repayment of `123.15 crore on account of Bonds and interest thereon. The bonds and the interest thereon are

devolve on the State Government further burdening its stressed finances…”

guaranteed by the State Government. If PFC fails to come out of the present situation, the due/outstanding principal and interest amount of Bonds secured by Government guarantee shall devolve on the State Government further burdening its stressed finances.

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“…During the year 2015-16, SUGARFED suffered the losses to the tune of `259.62

SUGARFED 5.9

The Punjab State Federation of Cooperative Sugar Mills Limited (SUGARFED) was established in 1966 under the

crore and the

Punjab State Cooperative Societies Act 1961. Its objective

accumulated losses

were: to assist in the promotion & organization of Sugar

as on 31.03.2016

Mills, facilitate and coordinate the working of Cooperative

amounted to

Sugar Mills in the State of Punjab; provide technical

`1214.50 crore...”

knowhow and other aspects in the selection of man power, purchase, installation and maintenance of plant & machinery and other equipment including expansion proposal, cogeneration and downstream Industrialization; assist sugar mills in securing the financial assistance from the State Government or Central Government or from other ‘Financial Institutions’; and purchase or assist in purchase of bulk gunny bags, Sulphur, limestone, lubricants, chemicals, spares and stores required by the sugar mills for their use and for the use of their ancillary units and allied industries. 5.10

Punjab Government holds equity share capital of `138.48 crore in the SUGARFED, and has also given loan of `1139.29 crore to SUGARFED. During the year 2016-17, a loan of `51.31 crore (`45.99 crore principal + `5.32 crore interest) of Bhogpur CSM was also converted into share capital. SUGARFED has also raised `157.46 crore as loan from Rural Development Fund, MARKFED, and PUDA. Due to overstaffing in sugar mills, under procurement of sugarcane, sale of sugar at lower prices and low revenue for high priced inputs, SUGARFED is running into losses.

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During the year 2015-16, SUGARFED suffered the losses to the tune of `259.62 crore and the accumulated losses as on 31.03.2016 amounted to `1214.50 crore. Due to poor financial health of the Cooperative Sugar Mills, mills

loans raised by PUDA from banks other than Government Guarantee is `545.00

are not in a position to the pay loans taken and hence

crore out of which

default has been made in repayment of `710.97 crore on

`486.66 crore is

account of principal and interest.

outstanding as on 28.02.2017...”

PUDA 5.11

“…The amount of

Punjab Urban Development Planning & Development Authority was constituted w.e.f 01.07.1995 under the Punjab Regional and Town Planning and Development Act 1995 with the objective to promote and secure better planning and development of any area of the State. Government has given guarantee amounting to `2124.93 crore, out of which outstanding guarantee as on 31.03.2017 is `1413.49 crore.This includes loan of `2000 crore raised by PUDA on behalf of the State Government, monthly installments of which are being funded by State Government out of the budget. The amount of loans raised from banks other than Government Guarantee is `545 crore, out of which `486.66 crore is outstanding as on 28.02.2017.

5.12

The regularization charges to the tune of approximately `400 crore were not used for long and then subsequently out of these, funds to the tune of `250 crore to be spent on the up gradation of these colonies were also got deposited into the State treasury as a short term loan thus leaving hardly any margin for the authorities to undertake development functions. The details of major PSUs is given at Annexures VIII – XVIII.

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“…MARKFED suffered a loss amounting to

`394.87 crore during the year 2015-16 and have accumulated losses amounting to

`1654.25 crore as on

MARKFED

5.13

The Punjab State Co-op Supply & Marketing Federation Ltd. known as “MARKFED” was registered in 1954. Punjab Government has an investment of `21.06 crore in the Share capital of MARKFED, and has given guarantee amounting to `27782.77 crore out of which `7219.81 crore

31.03.2016. Clearly,

is outstanding as on 28.02.2017, for its operations. Apart

this apex cooperative

from this, MARKFED also owes `1139.99 crore to financial

institution is suffering

institutions on account of loans (not secured by

from financial ills...”

Government Guarantee). MARKFED was making profits till 2010-11 but slipped into losses from 2011-12 onwards. MARKFED suffered a loss amounting to `394.87 crore during the year 2015-16 and have accumulated losses amounting to `1654.25 crore as on 31.03.2016. Clearly, this apex cooperative institution is suffering from financial ills. PUNJAB

STATE

CIVIL

SUPPLIES

CORPORATION

LIMITEDNSUP) 5.14 The Punjab State Civil Supplies Corporation Limited, popularly known as PUNSUP, incorporated on February 14, 1974, as a wholly owned Government Company with `3.73 crore Equity Share Capital of Punjab Government. The Government has given a Guarantee of `30185.70 crore to PUNSUP out of which `8685.83 crore are outstanding as on 28.02.2017. PUNSUP was making negligible profits till 2013-14 and slipped into Losses in the year 2014-15 adding to its accumulated losses which amounts to `1532.79 crore as on 31.03.2016. Apart from the loans raised against Government Guarantee, PUNSUP

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has also taken several loans from the Banks, out of which `1493.25 crore are outstanding as on 28.02.2017. PUNJAB AGRO FOOD GRAINS CORPORATION LIMITED 5.15

Punjab Agro Food Grains Corporation Limited was incorporated on 8th of July, 2002 to take up the activities relating to food grain, minerals, metals, fertilizers, chemical

“…the corporation was forced to divert funds of `52.34 crore to Atta Dal Scheme, whereas the same were to be spent by the State Government...”

pesticides etc.. Guarantee amounting to `12316.94 crore has been issued to the corporation out of which `5292.71 crore are outstanding as on 28.02.2017. The accumulated losses of the corporation, as on 31.03.2016 are `152.26 crore (approximately). Outstanding loans from the financial institutions (not covered by the Government Guarantee) amount to `418.74 crore as on 28.02.2017. PUNJAB STATE WAREHOUSING CORPORATION 5.16

The Warehousing Corporations Act, 1952, a Government of India Act provides for the incorporation and regulation of State Warehousing Corporations with an objective of warehousing of agricultural produce and other notified commodities. The Government of Punjab, Department of Agriculture notified the establishment of the Punjab State Warehousing Corporation (PSWC) w.e.f. 01.11.1967 for the above said purposes.

5.17

The corporation has been undertaking its core activity of warehousing and in addition procurement of food grains and implementation of the Atta Dal Scheme. It was forced to divert funds of `52.34 crore to Atta Dal Scheme, whereas the same were to be spent by the State Government.

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“…The State Government belatedly

5.18

The Government of India, Ministry of Food circulated PEG (Private

nominated

Entrepreneurs

Guarantee)

Scheme’

2008

earmarking creation of 71.25 LMT covered capacity in the

PUNGRAIN

State of Punjab through the private entrepreneurs. The

(incorporated by the Department of Food

policy prescribed the State Warehousing Corporations as

& Supplies) as the

the Nodal Agency of the respective States for the said

Nodal Agency in 2011

purpose of developing the covered capacities. But the

in contravention of

State of Punjab, against the said policy, delayed the

the Allocation of

finalization of the Nodal agency till up to 2011 thereby

Business Rules,

seriously impeding the implementation of the scheme.

2007...”

5.19

The Government of India, due to the lackadaisical attitude of the State Govt, withdrew 20 LMT allotted capacity of the State of Punjab and transferred the same to other States, thus reducing the share of Punjab to 51.25 LMTs which adversely affected the covered storage capacity on one hand and resulted in Open Storage of food grains on the other hand. The State Government belatedly nominated PUNGRAIN (incorporated by the Department of Food & Supplies) as the Nodal Agency in 2011 in contravention of the Allocation of Business Rules, 2007 i.e. Item No.13 under Rule-2 “Storage and Warehousing of Food grains including small size facility of storage and warehousing at farm level and assessment of storage capacity for storage of food grains to be procured by the Department of Food and Supplies and other Agencies” which is in the purview of Department of Agriculture through PSWC.

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5.20

The Government of India allocated silos creation @20 LMTs throughout the country in 2012 with a 30 year guarantee and 20% VGF. The State of Punjab was allocated 4 LMT out of this. In addition, the Government of Punjab on 20.05.2015, declared PSWC as the Nodal

PUNGRAIN without awaiting the report of the subcommittee of the Ministers and without any approval

Agency for the creation of 15 LMT silos in the State. The

and guarantee for silo

tenders for 8 sites were finalized by PSWC and it was in

capacity utilization

the advanced stages of grant of Letter of Intent when the

from FCI, proceeded

Department of Food and Supplies vide its letter dated

ahead with the

16.09.2015 restrained PSWC to proceed further in the

creation of silo

matter and the Government constituted a sub-Committee

capacity against the

of Ministers comprising Hon’ble Ministers of Food and Civil

Allocation of Business

Supplies, Finance and Agriculture for finalizing a uniform policy for Silo creation in the State. Subsequently, another committee was constituted on 25.02.2016 under the chairmanship of Hon’ble Deputy CM but the committee 5.21

“…Surprisingly,

rules. The haphazard creation of silo capacity by PUNGRAIN without any uniform policy

failed to submit any report.

and study of existing

Resultantly, PSWC was constrained to annul the tendering

storage capacities of

process. Surprisingly, PUNGRAIN without awaiting the

all agencies may

report of the subcommittee of the Ministers and without any

affect present

approval and guarantee for silo capacity utilization from

utilization of storage

FCI, proceeded ahead with the creation of silo capacity

capacities of State

against the Allocation of Business rules. The haphazard

Procuring agencies

creation of silo capacity by PUNGRAIN without any uniform policy and study of existing storage capacities of all agencies may affect present utilization of storage

(SPAs) resulting in financial loss to SPAs...”

capacities of State Procuring agencies (SPAs) resulting in financial loss to SPAs.

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“..The funds of the SPSEs have thus either not been used for the mandated

CONCLUSION 5.22

Thus, the key objective of establishing PSUs is being breached with the fact that on one hand the State is losing

purpose or diverted

on the return on investment with the meagre earning of

for works beyond

R4.01 crore dividend and at the same time unnecessarily

their jurisdiction...”

increasing the burden on the citizens of the State in the shape of Guarantees being given to these inefficient and loss making entities. 5.23

The funds of the State Public Sector Enterprises (SPSEs) have thus either not been used for the mandated purpose or diverted for works beyond their jurisdiction.

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OFF BUDGET FUNDS

Chapter 6

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Chapter 6: Off Budget Funds

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Chapter 6: Off Budget Funds

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OFF BUDGET FUNDS Chapter 6

6.0

As per Article 266 of the Constitution of India, all loans raised by State Government by issuing of Treasury bill, loans or ways & means advances and all moneys received by the State Government for repayment of loans, shall form the Consolidated Fund of the State.

6.1

There are a number of State Agencies including many

“…The total receipt of

boards and societies, which have been authorized from

these Organizations

time to time to collect funds in the form of fees and cess

for the last 5 years

directly and retain the collections in the bank accounts

have been in the

bypassing the Consolidated Fund of the state. These

range of `2473 crore

Organizations include Punjab Rural Development Board,

to `5224 crore

Punjab Municipal Infrastructure Development Company,

whereas the

Punjab Infrastructure Development Board, PLRS, ETTSA

expenditure has been

etc. The total receipt of these Organizations for the last 3

in the range of `3724

years has been in the range of `4234 crore to `6782 crore

crore to `5061

whereas the expenditure has been in the range of `5026

crore…”

crore to `8625 crore (Table 20 & 21). These off Budget funds have had a tremendous impact on the liquidity position of the state treasury thereby jeopardizing its efforts to mobilize funds under various schemes from the Government of India. 6.2

The

Receipts

and

Expenditure

of

these

Boards/Funds/Societies for the year 2014-15 to 2016-17 are given at Table 20.

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Table 20: Receipts and Expenditure of Boards/Funds/Societies - 2014-15 to 2016-17 (` crore) SN

1 2 3 4 5 6

Name of Fund

Recei pt

PIDB PMF PEDB PMIDC PLDB PRDB TOTAL

1177 1490 219 159 16 1173 4234

2014-15 Expen Surplu diture s/(Sho rtfall) 2131 1476 173 165 8 1073 5026

Recei pt

2015-16 Expendi ture

2636 1440 150 143 17 1217 5603

2165 1450 118 141 44 1104 5022

-954 14 46 -6 8 100 -792

Surplu s/(Sho rtfall)

Receipt

471 -10 32 2 -27 113 581

2193 1569 79 165 17 2759 6782

2016-17 Expen Surplus diture /(Shortf all) 4167 1565 79 131 34 2649 8625

-1974 4 0 34 -17 110 -1843

Source: (Concerned Boards/Funds/Societies)

Table 21: Receipts and Expenditures of some of the Societies - 2016-17 (` crore) SN. 1 2 3 4 5 6 7 8 9 10 11

Name of the Society Punjab State Transport Society Punjab State Media Society (Punmedia) Punjab Land Records Society Punjab State Fisheries Development Board Society for Promotion of Shrimp Farming in Punjab Punjab Live Stock Development Board Excise and Taxation Technical Services Agency (ETTSA) Punjab Information and Communication Technology Punjab Zoos Development Society Punjab State Child Protection Society Punjab State E-Governance Society

Total

Revenue

Expenditure 55.00 10.06 88.24 3.28

36.23 8.15 111.00 0.82

0.00

2.93

17.28 21.27

34.23 86.88

0.14

0.10

3.12 0.53 1.03 199.95

2.13 --1.60 284.07

Source: (Concerned Societies)

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“…It is observed that

SOCIETIES

yearly receipts and expenditure do not

6.3

match, they may be

There are three big spending societies floated by the Department of Transport (Punjab State Transport Society),

either accumulating

the Department of Revenue (Punjab Land Records Society)

funds in their corpus

and the Department of Excise and Taxation (Excise and

fund or spending out

Taxation Technical Services Agency). Ostensibly, these are

of it…”

Societies registered under the Registration of Societies Act, 1908, with the stated objective of implementing egovernance in the Transport Department, Computerization of Land Records and Registration Documents and Computerization of the Excise and Taxation department. Their sources of revenue are fees and user charges, which are retained by the societies and deposited in their respective bank accounts. 6.4

It is observed that yearly receipts and expenditure of these Societies do not match (Table 22). They may be either accumulating funds in their corpus fund or spending out of it (Table 22). Their functions are no different from the functions of the concerned departments and should be legitimately performed by them and the funds provided for the same in the State Budget.

Table 22: Receipts and Expenditure of Societies for 2014-15 to 2016-17 (` crore) Sr. No.

Name of Society

Receipts

Expenditure

1

Punjab State Transport Society

206.20

144.11

2

Punjab Land records Society

277.68

345.13

3

Excise and Taxation Technical Services Agency (ETTSA)

161.87

130.58

Source: (Concerned Societies)

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PUNJAB INFRASTRUCTURE DEVELOPMENT BOARD (PIDB) 6.5

The State Government in the Department of Finance notified creation of Punjab Infrastructure Development Board in 1998 for overall planning and infrastructure

6.6

“…The previous Government amended the PIDB Act from time to time and diluted the role of the Board from taking

development across various infrastructure sector.

to major projects to

The 1998 Act was repealed with more comprehensive

the smallest of the

Punjab Infrastructure (Development & Regulation) Act

projects…”

2002 to provide for the partnership of private and public sectors, participation of private sector in the development, operation and maintenance of infrastructure facilities and development and maintenance of infrastructure facilities through financial sources other than those provided by the State budget by following modern project management systems and for matter connected therewith or incidental thereto. The Board was mandated to take up flagship projects in the State and attract Private sector participation across various Infrastructure sectors. 6.7

The previous Government amended the PIDB Act from time to time and diluted the role of the Board from undertaking major projects to the smallest of the projects, which

were

inconsequential

for

the

infrastructure

development of the State, and didn’t create resource generating assets. 6.8

A major amendment in the Act which led to the dilution of the role of the Board in the year 2015-16 was that the role of conceptualization, identification, execution & monitoring of the projects was given to District Infrastructure Committees whereas such decisions were earlier taken at the level of the State's Administrative Departments and the Executive Committee of PIDB.

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“…the expenditure exceeds the income

6.9

On perusal of income and expenditure statement of last 10 years as given in Table 23, it can be seen that the

in six out of ten years

expenditure exceeds the income, in 6 out of 10 years

during the previous

during the previous Government regime.

Government regime…”

Table 23: Income & Expenditure of PIDB (` crore) Financial Year

Income

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 Grand Total

Expenditure

219.76 620.70 741.95 694.94 687.38 1304.37 1191.36 1177.38 2635.96 2203.30 11477.10

319.76 552.80 777.16 1066.69 1452.08 647.25 692.59 2130.96 2164.64 4194.26 13998.19

Excess of Expenditure over income (-) 100.00 (-) 35.21 (-) 371.75 (-) 764.70 (-) 953.58 (-) 1990.96

Source: (PIDB)

6.10

To meet with this shortfall, debt was raised by the Board, from time to time as detailed below by escrowing the future receipts of the Board.

Table 24: Detail of debt raised by PIDB (` crore) Particulars

Financial year

Amount of debt

Bonds

2007-08

649.93

Bonds

2008-09

900.03

Term Loans from Banks

2015-16

250.49

Term Loans from Banks

2016-17

2922.44

Grand Total

4722.89

Source: (PIDB)

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6.11

Even as on date, the outstanding debt of Bonds is `985.89 crore excluding interest which will be re-paid in installments upto to the year 2033-34 (Annexure - XIX). Similarly, the outstanding Bank loan is `2942.60 crore, which will be re-

“…The projects which were funded out of Funds of the Board were largely politically motivated and of little

paid in next five years starting from 2016-17 (Annexure -

consequence to the

XX). As on date, PIDB also has an estimated total

development of the

outstanding project funding liability of `5200 crore

State...”

(approximately). As a result of these borrowings, the Board will not be in a position to fund any new projects during the coming years. Thus, the then Government has usurped the rights of the future generations of the State by escrowing the future income of the Board. 6.12

The projects which were funded out of Funds of the Board were largely politically motivated and of little consequence to the development of the State. `1807.45 crore was allocated for Rural Mission, in which the majorly done projects were re-laying of streets and drains (GaliyanNaliyan) in the villages, linking of Deras with roads by brickwork, construction and repair of dharamshalas and up gradation of cremation grounds, etc. The Department of Rural Development and Panchayats should have done such projects from their budgetary allocations and not from the loan raised by escrowing the present and future receipts of PIDB. Similarly, `2412.29 crore was allocated for Urban Mission in which again major amount was spent on relaying and widening of roads. Again, such projects should have been funded by the Department of Local Government out of its own resources or budgetary allocations, subjecting them to the scrutiny of the State legislature.

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“…the role of PIDB

6.13

Similarly, funds were allocated for construction of

was reduced to

Memorials amounting to `269 crore & Hop-on-Hop-off

merely being a

Buses and Amphibious Bus of `10.91 crore.

funding agency and the various

6.14

temporary loan to Finance Department amounting to

Departments of the

`1125 crore which was not repaid.

State started meeting their financial

The Board was also made to advance short-term

6.15

The role of PIDB was reduced to merely being a funding

requirements from the

agency and the various Departments of the State started

Board, without

meeting their financial requirements from the Board,

making the projects

without making the projects self-sustainable and financially

self-sustainable and

viable at their own level. These expenditure were neither

financially viable at

presented for the sanction of the Punjab Vidhan Sabha nor

their own level. These

were these subject to the audit of CAG.

expenditure were neither presented for the sanction of the Punjab Vidhan Sabha nor were these subject to the audit of CAG…”

PUNJAB RURAL DEVELOPMENT BOARD (PRDB) 6.16

Punjab Rural Development Board came into existence on 9th April, 1987 under Punjab Rural Development Act, 1987 with

an

objective

to

provide

health,

educational,

infrastructural, facilities in rural areas and to develop better agriculture in rural areas. Punjab Government has issued guarantee of ` 5795.94 crore, out of which `2090.40 crore are outstanding as on 28.02.17. The income of the Board is from Rural Development Fee (RDF) which is levied on ad- valorem basis at the rate of `2/- for every one hundred Rupees in respect of Agricultural Produce, bought or sold in the notified market area. The Board has raised loans for meeting its expenditure by securitizing its future revenues and by agreeing to remit the same to an Escrow Account till the repayment of such loans. Loans amounting to `2090.40 crore are still outstanding. Page | 103 Funds

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6.17

The following irregularities have been observed in the functioning of the board: a. Funds are being released on adhoc basis without any plan or prioritisation of requirement of rural areas

“…the decisions were unplanned, scattered and against the core mandate of the constitution of Boards

b. Funds are being released without the works being administratively and technically approved.

and also need based assessment was

c. 100% funds are released to the Executing agencies

found missing ….”

on the receipt of adhoc demand d. The details of funds released are given in Annexure XXI, which shows that funds were unevenly released and major chunk of funds were released to the Districts of Sri Muktsar Sahib, Fazilka and Bathinda, which clearly depicts lopsided allocation of resources. 6.18

The receipt and payment of RDF for the last five years i.e. from 2012-13 to 2016-17 are given in Annexure XXII.

PUNJAB MANDI BOARD 6.19

The income of the Board is from Marketing Development Fee (Mandi Fee) which is levied on ad- valorem basis at the rate of `2 for every one hundred Rupees in respect of Agricultural Produce, bought or sold in the notified market area. The fee so levied is collected by the Market Committees of Punjab Mandi Board. Approximately 47 % of the Mandi Development Fee is received by the Punjab Mandi Board after the retention of approximately 53% at Market Committees.

6.20

The Market Fee is being spent for the purposes mentioned under Section 26 and Section 28 of The Punjab Agricultural produce Markets Act, 1961.

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“…the Board has incurred

6.21

Punjab Mandi Board has spent 45% of the fee collected on construction/repair of roads, another 24% to meet

disproportionately in

establishment expenditure and only 7% has been spent on

undertaking activities

the development of Mandis which is the main objective of

which should not have been that

constitution of the Board. The core areas on which the

important. Apart from

market development fund should have been utilized are the

this, the Board has

better marketing of agricultural products, grading and

pledged the future

standardising of agricultural products, to carry out

receipts by raising

extension activities and educating the farmers in marketing

loans and spending

activities. As against this the Board has incurred

them on unwarranted

disproportionately in undertaking activities which should

items...”

not have been that important. Apart from this, the Board has pledged the future receipts by raising loans and spending them on unwarranted items. 6.22

As per the orders of the previous Government, PMB has paid `15 crore, i.e. `5 crore per year towards cultural cess, which is not covered under section 26. Similarly maintenance of sports stadium had been assigned to PMB in contravention of the provisions of Section 26 and Section 28 of The Punjab Agricultural produce Markets Act, 1961.

Table 25: Expenditure detail of PMB (` crore) Sr. No.

Expenditure

2012-3

2013-14

2014-15

2015-16

2016-17 (BE)

1

Development Of Mandis

92.45

36.77

42.69

86.26

60.00

2

Board Work

20.02

25.21

1.73

7.08

8.00

3

Repair of Rural Link Roads

134.02

196.09

458.71

160.59

375.00

4

Marketing Development Schemes Total

9.68

17.96

38.85

18.92

10.95

256.17

276.03

541.98

272.85

453.95

Source: PMB Note: Cost of Office Building at Mohali for the years 2012-13 to 2014-15 Approx. `65 crore

Page | 105 Funds

Chapter 6: Off Budget

WHITE PAPER State Finances

“…the decisions were

CONCLUSION 6.23

unplanned, scattered

In view of the above it has been observed that amongst the administrative departments the issue of increasing tendency to float statutory entities and to retain the revenues generated by various levies, in a separate corpus fund, instead of depositing the same in the Consolidated

and against the core mandate of the constitution of Boards and also need based assessment was found missing ….”

Fund of the State. These expenditure were neither presented for the sanction of the Punjab Vidhan Sabha and nor were these subject to the audit of CAG. It is observed that the decisions were unplanned, scattered and against the core mandate of the constitution of these entities and also need based assessment was found missing, and certainly circumventing of Article 266 (1) of the Constitution of India.

Page | 106 Funds

Chapter 6: Off Budget

ABBREVIATIONS 1

BE

Budget Estimates

2

AG

Accountant General

3

AMRUT

Atal Mission for Rejuvenation and Urban Transformation

4

ARM

Additional Resource Mobilisation

5

BCR

Balance in Current Revenues

6

BPL

Below Poverty Line

7

C&AG

Comptroller and Auditor General

8

CAGR

Compound Annual Growth Rate

9

CAPEX

Capital Expenditure

10

CCL

Cash Credit Limit

11

DA

Dearness Allowance

12

DFPD

Department of Food and Public Distribution

13

EAP

External Aided Projects

14

EMI

Equated Monthly Instalment

15

ESO

Economic Statistical Organization

16

ETTSA

Excise and Taxation Technical Services Agency

17

FCI

Food Corporation of India

18

FD

Finance Department

19

FFC

Fourteenth Finance Commission

20

FI

Financial Institutions

21

FRBM

Fiscal Responsibility and Budget Management

22

GDP

Gross Domestic Product

23

GMADA

Greater Mohali Development Authority

Page | 107

24

GoI

Government of India

25

GoP

Government of Punjab

26

GSDP

Gross State Domestic Product

27

GST

Goods & Services Tax

28

HOUSEFED Punjab State Federation of Cooperative House Building societies Limited

29

MARKFED

Marketing Federation Limited

30

MDF

Marketing Development Fee

31

MILKFED

Punjab State Cooperative Milk Producers' Federation Limited

32

MoU

Memorandum of Understanding

33

MSP

Minimum Support Price

34

NABARD

National Bank for Agriculture and Rural Development

35

NIPFP

National Institute of Public Finance and Policy

36

NPA

Non-Performing Assets

37

NSSF

National Small Saving Funds

38

OMB

Open Market Borrowings

39

OTS

One Time Settlement

40

PFC

Punjab Financial Corporation

41

PIDB

Punjab Infrastructure Development Board

42

PIDF

Punjab Infrastructure Development Fund

43

PMB

Punjab Mandi Board

44

PMIDC

Punjab Municipal Infrastructure Development Company

45

PMIDF

Punjab Municipal Infrastructure Development Fund

46

PMO

Prime Minister Office

47

PRDB

Punjab Rural Development Board

Page | 108

48

PRIs

Panchayati Raj Institutions

49

PRTC

Punjab Road Transport Corporation

50

PSERC

Punjab State Electricity Regulatory Commission.

51

PSFC

Punjab State Finance Commission

52

PSIDC

Punjab State Industrial Development Corporations

53

PSPCL

Punjab State Power Corporation Limited

54

PSU

Public Sector Undertakings

55

PSWC

Punjab State Warehouse Corporation

56

PUDA

Punjab Urban Development Planning and Development Authority

57

PUNGRAIN

Punjab Grains Procurement Corporation Limited

58

PUNSUP

Punjab State Civil Supplies Corporation

59

RBI

Reserve Bank of India

60

RDB

Rural Development Board

61

RDF

Rural Development Fees

62

RE

Revised Estimates

63

RKVY

Rastriya Krishi Vikas Yojana

64

SBI

State Bank of India

65

SFC

State Finance Commission

66

SLR

Statutory Liquidity Ratio

67

SPA

State Procurement Agencies

68

SPSE

State Public Sector Enterprises

69

SUGARFED Punjab State Federation of Cooperative Sugar Mills.

70

ToR

Terms of Reference

71

UDAY

Ujwal DISCOM Assurance Yojana

Page | 109

72

ULBs

Urban Local Bodies

73

VAT

Value Added Tax

74

WMA

Ways and Means Advance

Page | 110

DEFINITIONS Sr. No. 1

Term Used

Definition

Budget Estimates The Budget attempts to arrive at an accurate estimate of the receipts (BE) and expenditure under each of the heads of accounts for the forthcoming year. The estimates are based upon the experience of the past years and the present policies of the Government and the anticipated events likely to occur in the future.

2

Capital Account

Capital Account are the transactions of the Government outside the Revenue Budget. Capital Account relates to the expenditure on items which lead to direct capital formation like buildings, roads, irrigation projects, machinery and equipment, share capital investments, etc. Capital Account also includes loans and advances given or obtained by the State Government. This would therefore, include the loans and advances received from the Centre and repayment thereof and the loans and advances made by the State Government to Boards, Corporations and other institutions and the repayment of such advances. The interest on these loans forms part of the revenue account.

3

Consolidated Fund

“Consolidated Fund” is the expression, which came into use, based on Article 266(1) of the Constitution. The normal revenues of the Government for the year, as shown in Revenue Account Receipts of the Budget, form part of the Consolidated Fund. Loans raised by the Government from the public, including financial institutions and form the Government of India, enter the Consolidated Fund. Moneys received by the government in repayments of loans are also included in the Consolidated Fund. The disbursements made out of these sources are consequently shown under the head of the Consolidated Fund. All expenditure proposed to be met from the Consolidated Fund should be placed before the Legislature and should be voted by the Legislature, except certain items classified as “charged” expenditure.

4

Contingent Liability

The State Government provides guarantee for loans of Boards and Corporations and these guarantees form the basis for the Government’s committed liability, in case of a default by the Board or Corporation on its loan repayment, the guarantee would get invoked by the lender and the State Government would be required to step in to repay the loan on behalf of the entity.

5

Fiscal Deficit

Fiscal Deficit means the excess of total disbursements from the Consolidated Fund of the State (excluding repayment of debt) over total receipts into the Consolidated Fund excluding the debt receipts during a financial year.

6

Gross State It is defined as a measure in monetary terms of the volume of all goods Domestic Product and services produced within the boundary of the State during a given (GSDP) period of time accounted without duplication.

7

Non-Plan and a) Non Plan Expenditure: Non Plan Expenditure, inter-alia includes Plan Expenditure committed expenditure on the establishment and other expenditure like grant-in-aid by the State Government maintenance of capital assets, subsidies, compensation, repayment of borrowings, interest payments Page | 111

Sr. No.

Term Used

Definition etc. In a nutshell, all expenditure which is recurring and is needed every year for the same purpose, is kept on the non- plan side. b) Plan Expenditure: Expenditure incurred on new development schemes/projects, expenditure on left over development works of previous year which are phased into two-three years or so, grant-in-aid given by GOI for a particular purpose like Central Finance Commission grants, etc., is termed as plan expenditure. Mostly it involves the expenditure on asset creation as well as on the development of infrastructure. The Non Plan and Plan expenditure both are further divided into revenue and capital account. The expenditure on establishment, State Grant in Aid, subsidies, compensation interest payments, etc. is kept under revenue account. Repayments of borrowings including cash credit for the purchase of food grains, provisions for creation of assets and other infrastructure, grant of loans to State Public Sector Undertakings and State Government Employees are kept under the Capital Account. The plan expenditure under the schemes of development nature is classified as under. 1. State Plan Schemes Sponsored by the State 2. Centrally Sponsored Schemes a. Schemes shared between State and Centre Government. b. Schemes 100% sponsored by the Centre Government in the State.C11

8

Per Capita The fixed assets are consumed in the process of production of these Income (PCI) goods and services in an economy during the given period of time. These fixed assets are known as consumption of fixed capital (CFC). When the CFC is deducted from GSDP, it gives NSDP (Net State Domestic Product). The NSDP divided by the Per Capita Income.

9

Public Account

Receipts and disbursements, such as deposits, reserve funds, remittances, etc. which do not form part of the “Consolidated Fund”, are included in the Public Account and are not subject to a vote by the Legislature, as they are not moneys issued out of the Consolidated Fund. All revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all money received by the Government in repayment of loans granted by that Government are credited into the Consolidated Fund of the State and provision is made in the Appropriation Bill passed under Article 204 of the Constitution for the appropriation out of the Consolidated Fund of all moneys required to meet the grants made by the Assembly and the expenditure charged on the above Fund. All other public moneys received by or on behalf of the Government of a State are credited to the Public Account of the State, and disbursements from that account, outside the Consolidated Fund of the State, do not require any appropriation of funds by the Legislature.

10

Revenue Expenditure

Revenue Account Disbursements give particulars of the estimated current expenditure of the different Departments of the Government. Of salaries and allowances, contingencies, grants in-aid, maintenance, pension, interest payments, interest charges etc. In other words it is primarily restricted to expenditure that does not lead to capital formation

Page | 112

Sr. No.

Term Used

Definition

11

Revenue Receipts

Revenue Account Receipts constitute the “Revenue Budget” which takes into account all revenue receipts. The total revenue receipts include State’s Own Taxes and Non-Tax Revenues and Grants-in-Aid and Share in Central Taxes from the Government of India.

12

Revenue Deficit

When the expenditure as summarized in Revenue Account Disbursements is deducted from the Revenue Account Receipts, we get the “Revenue Surplus” which is available for financing capital expenditure for the year. However, in recent years this has usually been a negative (minus) figure and is called the “Revenue Deficit”. Revenue Deficit otherwise means the excess of revenue expenditure over revenue receipts.

13

The Punjab Fiscal Responsibility and Budget Management Act, 2003

The State Legislature has enacted this Act to provide for the responsibility of the State Government to ensure prudence in fiscal management and fiscal stability by progressive elimination of revenue deficit, reduction in fiscal deficit, prudent debt management consistent with fiscal sustainability, greater transparency in fiscal operations of the Government and conduct of fiscal policy in a medium term framework and for matters connected therewith or incidental thereto.

Page | 113

REFERENCES

1. Department of Economic & Statistical Analysis, Punjab 2. Department of Food & Civil Supplies, Government of Punjab 3. Data for 2016-17 are the initial figures published by the AG Punjab 4. State Budget Document and Finance Account of AG Punjab 5. Concerned Departments (PIDB, Pungrain, Housing, PUDA, Food Agencies, 6. Collected from respective PSUs 7. PSPCL 8. Concerned Boards/Funds/Societies (PIDB, PMF, PEDB, PMIDC, PLDB, PRDB) 9. Concerned Societies 10. PIDB 11. Department of Food & Civil Supplies, Government of Punjab

Page | 114

Annexure I: Comparison of Growth rate of Gross State Domestic Product with other States (at constant prices 2004-05)

Sr. No.

State\UT

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

5.55%

14.54%

5.35%

15.04%

10.29%

10.69%

9.12%

Average 10.85%

1

Bihar

2006-07 16.18%

2

Goa

10.02%

5.54%

10.02%

10.20%

16.89%

20.20%

4.17%

7.71%

10.59%

3

Gujarat

8.39%

11.00%

6.78%

11.25%

10.01%

6.66%

6.15%

8.76%

8.63%

4

Haryana

11.22%

8.45%

8.17%

11.72%

7.41%

8.03%

5.50%

6.97%

8.43%

5

Madhya Pradesh

9.23%

4.69%

12.47%

9.56%

6.31%

8.54%

8.70%

9.48%

8.62%

6

Maharashtra

13.53%

11.26%

2.58%

9.30%

11.26%

4.52%

7.78%

7.28%

8.44%

7

Punjab**

10.18%

9.05%

5.85%

6.29%

6.52%

6.52%

4.64%

5.73%

6.85%

8

Rajasthan

11.67%

5.14%

9.09%

6.70%

14.41%

8.34%

6.41%

4.79%

8.32%

9

Tamil Nadu

15.21%

6.13%

5.45%

10.83%

13.12%

7.39%

3.39%

7.29%

8.60%

10

Uttar Pradesh

8.07%

7.32%

6.99%

6.58%

7.86%

5.58%

5.78%

4.95%

6.64%

Source: Ministry of Statistics and Programme Implementation, Government of India

Page | 115

Annexure-II: Balance in Current Revenues (BCR)

Page | 116

Sr. No.

Year

BCR

1

2006-07

2252

2

2007-08

-3656

3

2008-09

-3637

4

2009-10

-5757

5

2010-11

-4650

6

2011-12

-6373

7

2012-13

-6224

8

2013-14

-5739

9

2014-15

-6544

10

2015-16

-6138

11

2016-17

-4488

Annexure -III Pending Liability of Dearness Allowance The State Government is to discharge the liability of Rs. 2773 crore for payment of Dearness Allowance and Interim Relief as follows: Sr. No. 1 A.

B.

Rs. in crores

Amount With respect to Arrears Pending in Paid Treasury 6 7

Date of Sanction

Arrear Period

2

3

4

5

to 100%

14.10.2014 27.06.2016

01.01.2014 to 30.09.2014 (9 months) (Total 868 crore)

434

434

350

20.03.2015 27.06.2016

01.07.2014 to 28.02.2015 (9 months)

-

540

-

DA Rate

to 107%

Pending

C.

to 113%

24.08.2015

01.01.2015 to 31.07.2015 (9 months)

-

556

-

D.

to 119%

25.01.2016

01.07.2015 to 31.12.2015 (6 months)

358

-

-

E.

to 125%

21.10.2016

01.01.2016 to 31.10.2016 (10 months)

619

-

-

F.

to 132%

21.12.2016

01.07.2016 to 31.12.2016 (6 months)

417

-

-

G.

IR @ 5%

16.02.2017

01.01.2016 to 31.12.2016 (12 months)

595

-

-

2,423

1,530

350

Total Arrears (A-G) Total Pending DA Liability {Arrear Pending (Col.5) +Bills Pending in treasury (Col.7)}

Page | 117

2,773

Annexure -IV

Sr.

Debt Profile and Interest Payments of Punjab State Power Corporation Limited (PSPCL)

Particulars

No

unit

2006-

2007-

2008-

2009-

2010-

2011-

2012-

2013-

2014-

2015-

2016-

07

08

09

10

11

12

13

14

15

16

17

1

Total Revenue

Rs crore

8760

11431

11936

12250

13668

16104

19804

21694

23729

24068

25543

2

Total Interest Paid

Rs crore

1044

1073

1424

1646

1803

2199

2568

2667

2801

3263

2980

3

Long Term Loan Repayment

Rs crore

670

1983

974

2319

588

1734

882

1288

1306

1472

3256

Rs crore

1714

3056

2398

3965

2391

3933

3450

3955

4107

4735

6236

Rs crore

3069

2275

4570

6064

6787

5215

8176

2101

1988

10790

4568

Rs crore

4783

5331

6968

10029

9178

9148

11626

6056

6095

15525

10804

%

55

47

58

82

67

57

59

28

26

65

42

%

20

27

20

32

17

24

17

18

17

20

24

%

12

9

12

13

13

14

13

12

12

14

12

4 5 6

Interest $ LTL Repayment (2+3) Working Capital Loans Repayments Interest and total debt repayments Total interest and Debt

7

repayment to total revenue (Sr 6 /Sr1*100) Total interest and Debt

8

repayment without working capital to total revenue (Sr 4/Sr1*100)

9

Total interest to total revenue (Sr 2 /Sr1*100)

Page | 118

Annexure V : STATE EQUITY IN VARIOUS PSUs (Rs in crore)

Sr. No

Name of the Corporations/Boards, Co-operatives, Apex Institutions.

Year of the Account

Equity held by the State Government

2

3

4

1 A

INDUSTRIES

1

Punjab Financial Corporation

2015-16

29.31

2

Punjab State Industrial Dev. Corp.

2015-16

78.21

3

Punjab Small Industries & Export Corp.

2015-16

49.86

4

Punjab INFOTECH

2015-16

19.23

B

AGRICULTURE, ANIMAL HUSBANDRY AND FOREST

6

Punjab State Seeds Corporation

2015-16

4.51

7

Punjab Land Dev. & Reclamation Corp.

2017-18

1.45

8

Punjab Agro Industries Corporation

2015-16

45.46

9

Punjab State Warehousing Corporation

2015-16

4.00

10

Punjab State Container & Warehousing Corp.

2015-16

25.00

11

Punjab State Forest Dev. Corporation

2015-16

0.25

C

POWER & IRRIGATION

16

Punjab State Power Corp. Ltd.

2016-17

6081.47

17

Punjab State Transmission Corp. Ltd.

2015-16

605.88

18

Punjab Water Res. Mgt. & Dev. Corp.

2015-16

300.00

D

WELFARE

Page | 119

Sr. No

Name of the Corporations/Boards, Co-operatives, Apex Institutions.

Year of the Account

Equity held by the State Government

19

Punjab SCs Land Dev. & Finance Corp.

2015-16

5.42

20

Punjab Backward Classes Land Dev.Fin. Corp.

2014-15

20.00

E

FOOD

21

Punjab State Civil Supplies Corporation

2015-16

3.73

22

PUNGRAIN

2015-16

1.05

F

TRANSPORT

23

Pepsu Road Transport Corporation

2015-16

306.44

24

Punjab Bus Stand Management Company

2016-17

56.15

G

LOCAL GOVERNMENT

25

Punjab Water Supply & Sewerage Board

2015-16

6.58

26

PMIDC

2016-17

0.05

H

DEFENCE SERVICES WELFARE

27

Punjab Ex-servicemen Corporation

2015-16

2.05

2016-17

0.05

I

HOME

28

Punjab Police Housing Corporation

J

COOPERATION

29

MILKFED

2015-16

15.00

30

SUGARFED

2015-16

138.48

31

MARKFED

2015-16

21.06

32

HOUSEFED

2015-16

9.04

33

Punjab. State Co-op. Agri. Dev. Bank

2016-17

0.50

Page | 120

Sr. No

Name of the Corporations/Boards, Co-operatives, Apex Institutions.

Year of the Account

Equity held by the State Government

2015-16

0.20

2015-16

0.00

2016-17

0.00

2015-16

0.00

34

Punjab State Co-operative Bank

K

DEVELOPMENT

35

Punjab Infrastructure Dev. Board

L

HEALTH

36

Punjab Health System Corp.

M

HOUSING

37

Punjab Urban Planning & Dev. Authority

N

ALREADY CLOSED UNITS

38

Punjab State Leather Dev. Corp.

2004-05

3.42

39

PUNTEX

2014-15

0.00

40

Punjab. State Hosiery &Knitwear Dev. Corp

2005-06

390.70

41

Punjab. Poultry Development Corporation

2016-17

3.09

42

Punjab Tourism Development Corporation

2015-16

6.66

Total

8234.30

Source: Collected from respective PSUs.

Annexure VI: STATEMENT OF LOANS OF PSUs (Rs in Crore)

Page | 121

Sr. No 1

2

Year of Account 3

A

INDUSTRIES

1

Punjab Financial Corporation

2015-16

16.54

22.24

38.78

2

Punjab State Industrial Dev. Corp.

2015-16

-

0.00

0.00

3

Punjab Small Industries & Export Corp.

2015-16

0.00

0.00

0.00

4

Punjab INFOTECH

2015-16

0.00

0.00

0.00

5

Punjab Khadi & Village Industries Dev. Board

2014-15

0.00

27.92

27.92

B

AGRICULTURE, ANIMAL HUSBANDRY AND FOREST

6

Punjab State Seeds Corporation

2015-16

0.00

5.00

5.00

7

Punjab Land Dev. & Reclamation Corp.

2017-18

0.00

3.72

3.72

8

Punjab Agro Industries Corporation

2015-16

0.00

0.00

0.00

9

Punjab State Warehousing Corporation

2015-16

0.00

1146.94

1146.94

10

Punjab State Container & Warehousing Corp.

2015-16

0.00

0.00

0.00

11

Punjab State Forest Dev. Corporation

2015-16

0.00

0.00

0.00

12

Punjab Mandi Board

13

Punjab Agro Food Grain Corporation

2014-15

0.00

0.00

0.00

14

Punjab Agri Export Corporation Ltd.

2015-16

0.00

0.00

0.00

15

Punjab Rural Development Board

2015-16

0.00

0.00

0.00

C

POWER & IRRIGATION

16

Punjab State Power Corp. Ltd.

2016-17

15628.26

9602.74

23989.00

17

Punjab State Transmission Corp. Ltd.

2015-16

0.00

3741.17

3741.17

18

Punjab Water Res. Mgt. & Dev. Corp.

2015-16

222.25

0.00

222.25

Name of the Board/Corporation

Page | 122

Raised from Punjab Government 4

Other not Guaranteed by Punjab Government 5

0.00

Total 6

0.00

Sr. No

Name of the Board/Corporation

Year of Account

Raised from Punjab Government

Other not Guaranteed by Punjab Government

Total

D

WELFARE

19

Punjab SCs Land Dev. & Finance Corp.

2015-16

0.00

0.00

0.00

20

Punjab Backward Classes Land Development Finance Corporation.

2014-15

0.00

0.00

0.00

E

FOOD

21

Punjab. State Civil Supplies Corporation

2015-16

0.00

1109.12

1109.12

22

PUNGRAIN

2015-16

0.00

0.00

0.00

F

TRANSPORT

23

Pepsu Road Transport Corporation

2015-16

23.75

45.09

68.84

24

Punjab Bus Stand Management Company

2016-17

0.00

35.23

46.82

G

LOCAL GOVERNMENT

25

Punjab Water Supply & Sewerage Board

2015-16

0.00

0.00

0.00

26

PMIDC

2016-17

0.00

246.63

246.63

H

DEFENCE SERVICES WELFARE

27

Punjab Ex-servicemen Corporation

2015-16

0.00

0.00

0.00

I

HOME

28

Punjab Police Housing Corporation

2016-17

0.00

0.00

0.00

J

COOPERATION

29

MILKFED

2015-16

0.00

66.50

66.50

30

SUGARFED

2015-16

1139.29

0.00

1139.29

31

MARKFED

2015-16

0.00

1227.23

1227.23

32

HOUSEFED

2015-16

0.00

191.65

191.65

33

Punjab State Co-op. Agri. Dev. Bank

2016-17

0.00

200.00

200.00

Page | 123

Sr. No

Name of the Board/Corporation

Year of Account

Raised from Punjab Government

Other not Guaranteed by Punjab Government

Total

2015-16

0.83

5828.02

5828.85

0.00

0.00

0.00

0.00

34

Punjab State Co-operative Bank

35

PUNCOFED

K

SCIENCE & TECHNOLOGY

36

Punjab Pollution Control Board

0.00

0.00

0.00

0.00

37

Punjab Energy Development Agency

0.00

0.00

0.00

0.00

L

DEVELOPMENT

38

Punjab Infrastructure Dev. Board

2015-16

0.00

0.00

0.00

39

Punjab Roads & Bridges Dev. Board

0.00

0.00

0.00

0.00

M

HEALTH

40

Punjab Health System Corp.

2016-17

0.00

0.00

0.00

N

HOUSING

41

Punjab Urban Planning & Dev. Authority

2015-16

0.00

325.16

325.16

O

ALREADY CLOSED UNITS

42

Punjab State Leather Dev. Corp.

2004-05

0.00

0.00

0.00

43

PUNTEX

2014-15

0.00

0.00

0.00

44

Punjab. State Hosiery &Knitwear Dev. Corp

2005-06

0.00

0.00

0.00

45

Punjab. Poultry Development Corporation

2016-17

0.00

0.00

0.00

46

Punjab Tourism Development Corporation

2015-16

0.00

0.00

0.00

17030.92

23824.36

39624.87

Total Source: Collected from respective PSUs

Page | 124

Annexure VII: DETAILED STATEMENT OF GUARANTEES GIVEN BY THE GOVERNMENT Guarantees given by State Government for repayment of loans etc. raised by statutory Corporations/boards, Government Companies, Local Bodies, Co-operative Banks and societies during the year and sums guaranteed outstanding on 31st March 2017 in various sectors are shown below (In Lacs): Invoked during the Guarantee year /commission fee S Name of Corporations Class Maxim Outstan Additi Deletion Discharged Not Outstan Paid r. (No. of um ding at on during Discha ding at Payabl N Guarante Amoun the durin the year rged the end e o. es)(a) t beginni g the of the Guaran ng of year year teed the (Principa during year l) the year 1 BACKFINCO 0 0 6530.09 600 301 6829.09 2

Punjab Forest development corporation

0

0

1178

3

2

60910. 5 85000

60910.5

4

Punjab State industrial development corporation PMIDC

5

MILKFED

0

6

PUNSUP

7

Punjab Schedule Class and Land Development Corporations

8

Punjab State Warehouing Corporations

9

Punjab State Cooperative Agricultural Development Bank PIDC

1 0 1 1

Punjab Agro Industries corporation

Page | 125

1178

0

0

0

0

0

0

264

0

0

60646

0

2663

34631

5000

9928

0

0

29703

0

0

0

1249.4

0

0

0

0

1249.4

0

0

0

0

963840

5961

930350

0

0

39451

0

0

loan from national corporatio n 0

2000

2853.14

0

0

360.2

0

2492.94

0

0

0

462021. 08 233210

0

0

0

1200

0

0

53830

460821.0 8 50177

0

0

236863

0

0

404995. 62 1200

31356 4.25 1000

322172.9 1 470

110165 0 0

2712.6 3

0 0

0 0

396386.9 6 1730

0

0 0

1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2

Punjab State Water Sewearge Board Markfed

Supply

and

Punjab Khadi and Gram Udyog

0

323.9

0

300.9

0

0

23

0

0

0

932252

0

918722

0

0

13530

0

57.008 52 0

0

0

957

0

0

0

957

957

0

0

807432

0

683154

124278

0

0

0

0

82686

35000

19613

0

0

98073

1000

0

572384

0

561247

0

0

11137

0

0

30000

23800

23250

10320

0

0

36730

0

664

2366.3

0

0

0

19591.65

0

0

17980 0 29671. 88 16932 6 81936 9.43

47990

0

0

209040

0

1800

25174

0

0

0

0

273605

0

0

141348.8 8 753835

2000

2500

PUNGRAIN Punjab State Transmission Corporation

0

156112

Punjab Agro Foodgrains Corporation Punjab Mandi Board

0

Punjab Financial Corporation Punjab Rural Development Board

1

90000

17225.3 5 77230

PUDA

6

0

136851

POWERCOM

0

0

858114

152838 5.13

568187 4.08

Total

4315787. 89

124638.2

957

2060816. 92

3000

* There was a outstanding amount of rupees 683154 lac on 10.03.2017 same has been transfer as term loan in the name of Government of Punjab. * Revolving Guarantee

Page | 126

7684.0 0852

Annexure- VIII Punjab Infrastructure Development Board (PIDB) Sr. No

Particulars

unit

2006-07

2007-08

200809

200910

201011

201112

1

Total Revenue

Rs crore

181.28

219.76

620.7

741.95

619.94

687.38

2

Total Interest Paid

Rs crore

0

2.91

15.11

105.48

105.48

3

Long Term Loan Repayment

Rs crore

0

0

0

0

4

Intt. $ LTL Repayment (2+3)

Rs crore

0

2.91

15.11

5

Working Capital Loans Repayments

Rs crore

0

0

6

Interest and total debt repayments

Rs crore

0

%

7

8

9

Total interest and Debt repayment to total revenue (Sr 6 /Sr1*100) Total interest and Debt repayment without working capital to total revenue (Sr 4/Sr1*100) Total interest to total revenue (Sr 2 /Sr1*100)

Page | 127

201213 1304.3 7

201314 1191.3 6

201415 1177.3 8

201516 2635.9 7

201617 2193.2 5

105.48

105.48

105.48

105.48

108.4

214.35

0

0

0

0

0

88.13

670.88

105.48

105.48

105.48

105.48

105.48

105.48

196.53

885.23

0

0

0

0

0

0

0

0

0

2.91

15.11

105.48

105.48

105.48

105.48

105.48

105.48

196.53

885.23

0

1.32

2.43

14.22

17.01

15.35

8.09

8.85

8.96

7.46

40.36

%

0

1.32

2.43

14.22

17.01

15.35

8.09

8.85

8.96

7.46

40.36

%

0

1.32

2.43

14.22

17.01

15.35

8.09

8.85

8.96

4.11

9.77

Annexure- IX Punjab Municipal Infrastructure Development Company (PMIDC)

Sr. No

Particulars

unit

1

Total Revenue

Rs crore

2

Total Interest Paid

3

2009-10

11

201213

2013-14

2014-15

201516

2016-17

2.58

2.63

12.42

1.73

1.1

Rs crore

6.12

36.85

29.46

45.66

42.06

28.63

Long Term Loan Repayment

Rs crore

32

52

126

234.32

99.28

99.28

4

Intt. $ LTL Repayment (2+3)

Rs crore

0

0

38.12

88.85

155.46

279.98

141.34

127.91

5

Working Capital Loans Repayments

Rs crore

0

0

0

0

0

0

0

0

6

Interest and total debt repayments

Rs crore

0

0

38.12

88.85

155.46

279.98

141.34

127.91

%

0.00

0.00

3343.86

3443.80

5911.03

2254.27

8169.94

11628.18

%

0.00

0.00

3343.86

3443.80

5911.03

2254.27

8169.94

11628.18

%

0.00

0.00

536.84

1428.29

1120.15

367.63

2431.21

2602.73

Total interest and Debt repayment to total revenue (Sr 6 /Sr1*100)

0.48

2011-12 1.14

7

0.09

2010-

Total interest and Debt repayment 8

without working capital to total revenue (Sr 4/Sr1*100)

9

Total interest to total revenue (Sr 2 /Sr1*100)

Note: The interest and Principal paid on Long term loans is paid from PMIDF fund so the amount of interest paid not debited against the revenue earned by PMIDC . Therefore the ratio of row numbers 7,8,&9 is not appopriate

Page | 128

Annexure- X MARKFED

Sr. No

Particulars

unit

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

1

Total Revenue

Rs crore

3619.23

4689.21

5530.17

7528.37

9057.91

9235.07

2

Total Interest Paid

Rs crore

201.16

360.27

661.61

861.26

913.27

Rs crore

0

0

0

0

Rs crore

201.16

360.27

661.61

Rs crore

10206.02

8580.03

9352.07

Rs crore

10407.18

8940.3

%

288

%

%

3 4 5 6

Long Term Loan Repayment Intt. $ LTL Repayment (2+3) Working Capital Loans Repayments Interest and total debt repayments

2012-13

2013-14

2014-15

2015-16

2016-17

10641.0

13135.7

12861.8

12939.1

13384.1

5

1

3

9

3

1264.71

1586.92

1600.86

1582.22

1550.19

1473.37

0

0

0

0

0

0

0

861.26

913.27

1264.71

1586.92

1600.86

1582.22

1550.19

1473.37

15903.2

17906.0

19981.6

17802.9

21383.6

14860.1

9

1

9

8

9

4

10013.6

16764.5

18819.2

16442.3

5

8

19389.9

22984.5

8

21246.4

5

6

191

181

223

208

230

182

175

128

63

110

5.56

7.68

11.96

11.44

10.08

13.69

14.91

12.19

12.30

11.98

11.01

5.56

7.68

11.96

11.44

10.08

13.69

14.91

12.19

12.30

11.98

11.01

6641.5 8191.69

13270.1 8 14743.5 5

Total interest and Debt 7

repayment to total revenue (Sr 6 /Sr1*100) Total interest and Debt

8

repayment without working capital to total revenue (Sr 4/Sr1*100)

9

Total interest to total revenue (Sr 2 /Sr1*100)

Page | 129

Annexure- XI PUNGRAIN Sr.

Particulars

No

unit

2006-

2007-

2008-

2009-

2010-

2011-

2012-

07

08

09

10

11

12

13

3543.4

4902.5

6667.6

8340.3

8516.5

4

4

1

2

2013-14

2014-15

2015-16

9644.9

11987.9

12583.0

13977.3

1

1

9

3

6

1040.9

1216.2

1

9

1281.02

1309.64

1430.1

0

0

0

0

0

1040.9

1216.2

1

9

1281.02

1309.64

1430.1

4646.9

3572.9

5921.49

5226.55

1878.25

7202.51

6536.19

3308.35

1

Total Revenue

Rs crore

3060.9

2

Total Interest Paid

Rs crore

108.62

204.28

407.65

574.82

714.38

3

Long Term Loan Repayment

Rs crore

0

0

0

0

0

4

Intt. $ LTL Repayment (2+3)

Rs crore

108.62

204.28

407.65

574.82

714.38

Rs crore

318.16

797.28

1398.0

1822.5

3478.8

7

4

3

Rs crore

426.78

1001.5

1805.7

2397.3

4193.2

5687.8

4789.1

6

2

6

1

1

9

%

13.94

28.27

36.83

35.96

50.28

66.79

49.66

60.08

51.94

23.67

%

3.55

5.77

8.32

8.62

8.57

12.22

12.61

10.69

10.41

10.23

%

3.55

5.77

8.32

8.62

8.57

12.22

12.61

10.69

10.41

10.23

5 6

Working Capital Loans Repayments Interest and total debt repayments Total interest and Debt

7

repayment to total revenue (Sr 6 /Sr1*100) Total interest and Debt

8

repayment without working capital to total revenue (Sr 4/Sr1*100)

9

Total interest to total revenue (Sr 2 /Sr1*100)

Page | 130

Annexure- XII Punjab Rural Development Board (PRDB) Sr.

2006-

2007-

2008-

2010-

2011-

2012-

2013-

2014-

2015-

2016-

07

08

09

11

12

13

14

15

16

17

Rs crore

348.81

393.76

575.69

655.41

632.69

638.41

826.03

747.47

757.6

879.02

933

Rs crore

27.43

33.89

40.98

54.27

78.22

138.33

162.21

122.37

73.78

63.27

114.43

Rs crore

111.5

113.82

112.37

173.24

280.58

347.64

411.67

400

420.5

289.65

407.9

Rs crore

138.93

147.71

153.35

227.51

358.8

485.97

573.88

522.37

494.28

352.92

522.33

Rs crore

0

0

0

0

0

0

0

0

0

0

0

Rs crore

138.93

147.71

153.35

227.51

358.8

485.97

573.88

522.37

494.28

352.92

522.33

%

39.83

37.51

26.64

34.71

56.71

76.12

69.47

69.89

65.24

40.15

55.98

%

39.83

37.51

26.64

34.71

56.71

76.12

69.47

69.89

65.24

40.15

55.98

%

7.86

8.61

7.12

8.28

12.36

21.67

19.64

16.37

9.74

7.20

12.26

Particulars

unit

1

Total Revenue

2

Total Interest Paid

No

3 4 5 6

Long Term Loan Repayment Intt. $ LTL Repayment (2+3) Working Capital Loans Repayments Interest and total debt repayments

2009-10

Total interest and Debt 7

repayment to total revenue (Sr 6 /Sr1*100) Total interest and Debt

8

repayment without working capital to total revenue (Sr 4/Sr1*100)

9

Total interest to total revenue (Sr 2 /Sr1*100)

Page | 131

Annexure- XIII Punjab Urban Planning & Development Authority (PUDA) Sr.

2006-

2007-

2008-

2009-

2010-

2011-

2012-

2013-

2014-

2015-

2016-

07

08

09

10

11

12

13

14

15

16

17

Rs crore

186.85

301.47

754.03

286.73

309.23

132.63

239.3

325.34

774.46

749.48

669.19

Total Interest Paid

Rs crore

0

0

0

0

0

0

1.9

154.93

197.63

184.86

161.95

3

Long Term Loan Repayment

Rs crore

0

0

0

0

0

0

0

20.04

278.86

353.43

293.41

4

Intt. $ LTL Repayment (2+3)

Rs crore

0

0

0

0

0

0

1.9

174.97

476.49

538.29

455.36

Rs crore

0

0

0

0

0

0

0

0

0

0

0

Rs crore

0

0

0

0

0

0

1.9

174.97

476.49

538.29

455.36

%

0.00

0.00

0.00

0.00

0.00

0.00

0.79

53.78

61.53

71.82

68.05

%

0.00

0.00

0.00

0.00

0.00

0.00

0.79

53.78

61.53

71.82

68.05

%

0.00

0.00

0.00

0.00

0.00

0.00

0.79

47.62

25.52

24.67

24.20

Particulars

unit

1

Total Revenue

2

No

5 6

Working Capital Loans Repayments Interest and total debt repayments Total interest and Debt

7

repayment to total revenue (Sr 6 /Sr1*100) Total interest and Debt

8

repayment without working capital to total revenue (Sr 4/Sr1*100)

9

Total interest to total revenue (Sr 2 /Sr1*100)

Page | 132

Annexure- XIV Greater Mohali Area Development Authority (GMADA) Sr.

Particulars

unit

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

1

Total Revenue

Rs crore

37.5

398.77

635.49

187.18

742.47

1100.63

1136.58

716.16

1120.22

1049.65

852

2

Total Interest Paid

Rs crore

0

0

0

0

39.41

53.64

152.73

166.92

208.38

228.92

275.15

Rs crore

0

0

0

0

423.29

244.59

280.5

190.81

1286.72

0

843.5

Rs crore

0

0

0

0

462.7

298.23

433.23

357.73

1495.1

228.92

1118.65

Rs crore

0

0

0

0

0

0

0

0

0

0

0

Rs crore

0

0

0

0

462.7

298.23

433.23

357.73

1495.1

228.92

1118.65

%

0.00

0.00

0.00

0.00

62.32

27.10

38.12

49.95

133.46

21.81

131.30

%

0.00

0.00

0.00

0.00

62.32

27.10

38.12

49.95

133.46

21.81

131.30

%

0.00

0.00

0.00

0.00

5.31

4.87

13.44

23.31

18.60

21.81

32.29

No

3 4 5 6

Long Term Loan Repayment Intt. $ LTL Repayment (2+3) Working Capital Loans Repayments Interest and total debt repayments Total interest and Debt

7

repayment to total revenue (Sr 6 /Sr1*100) Total interest and Debt

8

repayment without working capital to total revenue (Sr 4/Sr1*100)

9

Total interest to total revenue (Sr 2 /Sr1*100)

Page | 133

Annexure- XV Punjab Road Transport Corporation (PRTC) Sr.

Particulars

No

unit

2006-

2007-

2008-

2009-

2010-

2011-

2012-

2013-

2014-

2015-

2016-

07

08

09

10

11

12

13

14

15

16

17

1

Total Revenue

Rs crore

437.73

443.73

236

245.35

289.41

319.48

340.84

376.12

376.77

413.02

458

2

Total Interest Paid

Rs crore

7.6

5.75

9.23

9.87

11.16

7.92

9.5

8.61

8.59

10.03

11.12

3

Long Term Loan Repayment

Rs crore

3.84

8.09

8.02

9.68

10.83

9.92

18.54

13.64

11.96

6.81

7.2

4

Intt. $ LTL Repayment (2+3)

Rs crore

11.44

13.84

17.25

19.55

21.99

17.84

28.04

22.25

20.55

16.84

18.32

Rs crore

0

0

0

0

0

0

0

0

0

0

0

Rs crore

11.44

13.84

17.25

19.55

21.99

17.84

28.04

22.25

20.55

16.84

18.32

%

2.61

3.12

7.31

7.97

7.60

5.58

8.23

5.92

5.45

4.08

4.00

%

2.61

3.12

7.31

7.97

7.60

5.58

8.23

5.92

5.45

4.08

4.00

%

1.74

1.30

3.91

4.02

3.86

2.48

2.79

2.29

2.28

2.43

2.43

Working Capital Loans

5

Repayments Interest and total debt

6

repayments Total interest and Debt

7

repayment to total revenue (Sr 6 /Sr1*100) Total interest and Debt repayment without working

8

capital to total revenue (Sr 4/Sr1*100) 9

Total interest to total revenue (Sr 2 /Sr1*100)

Page | 134

Annexure- XVI PUNSUP SN

Particulars

unit

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

1

Total Revenue

Rs crore

3618.67

4450.23

5170.94

6591.24

7921.16

8901.35

9967.01

12159.76

10835.25

11817.89

2

Total Interest Paid

Rs crore

194.13

295.26

551

804.42

838.99

1133.7

1413.54

1426.79

1391.41

1103.48

Rs crore

0

0

0

0

0

0

0

0

0

0

Rs crore

194.13

295.26

551

804.42

838.99

1133.7

1413.54

1426.79

1391.41

1103.48

Rs crore

2579.75

3882.52

3493.97

4419.52

6266.11

7197.33

6532

9037.93

8196.62

9258.92

Rs crore

2773.88

4177.78

4044.97

5223.94

7105.1

8331.03

7945.54

10464.72

9588.03

10362.4

%

76.65

93.88

78.23

79.26

89.70

93.59

79.72

86.06

88.49

87.68

%

5.36

6.63

10.66

12.20

10.59

12.74

14.18

11.73

12.84

9.34

%

5.36

6.63

10.66

12.20

10.59

12.74

14.18

11.73

12.84

9.34

3 4 5 6

Long Term Loan Repayment Intt. $ LTL Repayment (2+3) Working Capital Loans Repayments Interest and total debt repayments Total interest and Debt

7

repayment to total revenue (Sr 6 /Sr1*100) Total interest and Debt

8

repayment without working capital to total revenue (Sr 4/Sr1*100)

9

Total interest to total revenue (Sr 2 /Sr1*100)

Page | 135

Annexure- XVII Punjab Agricultural Marketing Board (Mandi Board) 2009-

2010-

2011-

2012-

2013-

2014-

2015-

2016-

10

11

12

13

14

15

16

17

388.6

375.28

413.3

426.96

505.7

528.78

751.33

558.11

485.25

10.86

16.13

31.73

29.63

34.83

31.08

20.73

36.51

26.79

36

22.83

24.99

51.57

48

108.47

96.9

112.42

100

160

100

103.2

Rs crore

31.63

35.85

67.7

79.73

138.1

131.73

143.5

120.73

196.51

126.79

139.2

Rs crore

0

0

0

0

0

0

0

0

0

0

0

Rs crore

31.63

35.85

67.7

79.73

138.1

131.73

143.5

120.73

196.51

126.79

139.2

%

17.55

15.69

17.42

21.25

33.41

30.85

28.38

22.83

26.15

22.72

28.69

%

17.55

15.69

17.42

21.25

33.41

30.85

28.38

22.83

26.15

22.72

28.69

%

4.88

4.75

4.15

8.46

7.17

8.16

6.15

3.92

4.86

4.80

7.42

Particulars

unit

1

Total Revenue

Rs crore

180.27

228.44

2

Total Interest Paid

Rs crore

8.8

Rs crore

3 4 5 6

Long Term Loan Repayment Interest $ LTL Repayment (2+3) Working Capital Loans Repayments Interest and total debt repayments

2006-07

2007-

SN

08

2008-09

Total interest and Debt 7

repayment to total revenue (Sr 6 /Sr1*100) Total interest and Debt

8

repayment without working capital to total revenue (Sr 4/Sr1*100)

9

Total interest to total revenue (Sr 2 /Sr1*100)

Page | 136

Annexure- XVIII Punjab State Transmission Corporation Limited (PSTCL) Sr. No

Particulars

unit

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

1

Total Revenue

Rs crore

408

534

895

1323

953

1177

883

2

Total Interest Paid

Rs crore

124

179

216

269

374

477

519

3

Long Term Loan Repayment

Rs crore

107

140

146

307

315

380

313

4

Intt. $ LTL Repayment (2+3)

Rs crore

231

319

362

576

689

857

832

5

Working Capital Loans Repayments

Rs crore

0

0

100

0

0

0

231

6

Interest and total debt repayments

Rs crore

231

319

462

576

689

857

1063

%

57

60

52

44

72

73

120

%

57

60

40

44

72

73

94

%

30

34

24

20

39

41

59

7

Total interest and Debt repayment to total revenue (Sr 6 /Sr1*100) Total interest and Debt repayment

8

without working capital to total revenue (Sr 4/Sr1*100)

9

Page | 137

Total interest to total revenue (Sr 2 /Sr1*100)

Annexure – XIX: Summary of Various Bonds raised by PIDB - As on 31.05.2017

Sr. No.

1.

Bond Series

PIDB Bonds Series-I (Regular Return Bonds)

2.

PIDB Bonds Series-II (Deep Discount Bonds)

3.

PIDB Bonds Series-III (Deep Discount Bonds)

Page | 138

Amount (Crore)

150

499.93

150.03

Date of Allotment

06.08.2007

27.12.2007

15.10.2008

Rate of Interest

10.07%

10.19%

11.98%

Tenure of Bonds

10 Years

20 Years

25 Years

Put Call/Buy Back of Bonds (Crore)

119.07

Outstanding Bonds (Crore)

30.93

-

-

Repayment

Put & Call Option

In 3 Equal Installments starting from the end of 8th year

Was available at the end of 8th Year (i.e. on 06.08.15)

499.93

In 10 Equal Installments starting from the end of 11th year

None

150.03

In 10 Equal Installments starting from the end of 16th year

None

Repayment Dates

Repayment Amount (in crores) Interest

Principal

06.08.2017

3.11

30.93

27.12.2018 27.12.2019 27.12.2020 27.12.2021 27.12.2022 27.12.2023 27.12.2024 27.12.2025 27.12.2026 27.12.2027 15.10.2017 15.10.2018 15.10.2019 15.10.2020 15.10.2021 15.10.2022 15.10.2023 15.10.2024 15.10.2025

4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.05

216.70 216.70 216.70 216.70 216.70 216.70 216.70 216.70 216.70 216.70 112.50 112.50

4.

5.

6.

PIDB Bonds Series-IVA (Regular Return Bonds)

PIDB Bonds Series-IVB (Regular Return Bonds)

PIDB Bonds Series-IVC (Regular Return Bonds) Total

Page | 139

252

442

56

1549.96

31.12.2008

19.01.2009

16.02.2009

11.45%

11.45%

11.45%

15 Years

15 Years

15 Years

172.10

235.60

37.30

564.07

79.90

206.40

18.70

985.89

In 5 Equal Installments starting from the end of 11th year

In 5 Equal Installments starting from the end of 11th year

In 5 Equal Installments starting from the end of 11th year

At the end of 10th Year

At the end of 10th Year

At the end of 10th Year

15.10.2026 15.10.2027 15.10.2028 15.10.2029 15.10.2030 15.10.2031 15.10.2032 15.10.2033 31.12.2017 31.12.2018 31.12.2019

3.60 3.15 2.70 2.25 1.80 1.35 0.90 0.45 9.15 9.15

112.50 112.50 112.50 112.50 112.50 112.50 112.50 112.50 15.98

31.12.2020

7.32

15.98

31.12.2021

5.49

15.98

31.12.2022

3.66

15.98

31.12.2023

1.83

15.98

19.01.2018 19.01.2019 19.01.2020

23.63 23.63 23.63

41.28

19.01.2021

18.91

41.28

19.01.2022

14.18

41.28

19.01.2023

9.45

41.28

19.01.2024

4.73

41.28

16.02.2018 16.02.2019 16.02.2020

2.14 2.14 2.14

3.74

16.02.2021

1.71

3.74

16.02.2022

1.28

3.74

16.02.2023

0.86

3.74

16.02.2024

0.43

3.74

224.82

3,627.93

Note(s): (i) In Case of PIDB Bonds Series-I, Put option was exercised by Bondholders holding principal amount of Rs. 88.13 crores & two installments of principal amount of Rs. 30.94 crores has been paid by PIDB and now the principal amount outstanding against Rs. 150 crores is only Rs. 30.93 crores. (ii) In Case of PIDB Bonds Series-IVA, IVB & IVC, various Bondholders gave their consent for the Buy-Back of PIDB Bonds & the principal amount outstanding against these Bonds is now Rs. 305 crores, since PIDB bought back Bonds of Rs. 445 crores till date out of Rs. 750 crores.

Page | 140

Annexure – XX : Details of Loans sanctioned/ availed by PIDB and latest position (A) Loan Phase I - Rs. 1600 crores + Loan Phase II - Rs. 900 crores + Loan Phase III - Rs. 700 crores + Loan Phase IV - Rs. 900 crores = Total Rs. 4100 crores

SN

Name of Banks

Loan Sanctioned

Loan Availed till date

Loan re-paid

Outstanding Loan

Rate of Interest

1.

Bank of India

500.00

365.42

72.80

292.62

9.25% (MCLR 9.25% + 0.00% spread)

2.

ICICI Bank

300.00

300.00

43.75

256.25

9.34% (Base Rate 9.10% + 0.24% spread)

3.

Oriental Bank of Commerce

300.00

293.25

47.11

246.14

9.40% (MCLR 8.60% + 0.80% spread)

4.

Indian Bank

200.00

200.00

29.17

170.83

9.25% (MCLR Rate 8.60% + 0.65% spread)

5.

UCO Bank

200.00

162.16

33.34

128.82

9.25% (MCLR 8.60% + 0.65% spread)

1,500.00

1,320.83

226.17

1,094.66

Total 6.

HDFC Bank

100.00

100.00

4.16

95.84

9.19% (Base Rate 9.00% + 0.19% spread)

7.

Andhra Bank

200.00

200.00

-

200.00

9.55% (MCLR 9.55% + 0% spread)

8.

Indian Bank

300.00

300.00

-

300.00

9.55% (MCLR 9.45% + 0.10% spread)

9.

UCO Bank

100.00

100.00

-

100.00

9.60% (MCLR 9.45% + 0.15% spread)

10.

Punjab National Bank

300.00

300.00

-

300.00

9.55% (MCLR 9.55% + 0.00% spread)

1,000.00

1,000.00

4.16

995.84

Total 11.

Canara Bank

500.00

500.00

-

500.00

9.30% (MCLR 9.30% + 0.00% spread)

12.

UCO Bank

200.00

150.00

-

150.00

9.30% s(MCLR 9.30% + 0.00% spread)

700.00

650.00

-

650.00

Total 13.

Union Bank of India

200.00

30.10

-

30.10

9.30% (MCLR 9.30% + 0.00% spread)

14.

Punjab National Bank

200.00

129.00

-

129.00

9.15% (MCLR 9.15% + 0.00% spread)

15.

Canara Bank

500.00

43.00

-

43.00

8.45% (MCLR 8.45% + 0.00% spread)

Total

900.00

202.10

-

202.10

Grand Total of Loan

4,100.00

3,172.93

230.33

2,942.60

Page | 141

Annexure XXI Fund Flow Statement (Rs in crores) SN 1

PARTICULARS

2017-18

Expected Receipt of RDF

Total Receipt

820.00

-I

820.00

A

INTEREST PAYMENTS ON LOANS

A

186.13

B

REPAYMENT OF LOANS

B

466.80

C

AMOUNT FOR OTHER EXPENDITURE

C

20.00

Total Payments A+B+C

- II

SURPLUS AVAILABLE FOR OTHER DEVELOPMENTAL WORKS (I-II)

Page | 142

672.93 147.07

Annexure- XXII Receipts and Expenditure of PRDB (Rs. In crores)

Page | 143

Receipts ( including loans availed)

Payments (including repayment of loans)

Excess of Receipt over Payments

120.00

516.32

448.83

187.49

2006-07

187.49

733.61

807.37

113.73

2007-08

113.73

439.90

499.44

54.19

2008-09

54.19

875.68

868.61

61.26

2009-10

61.26

1145.21

1041.73

164.74

2010-11

164.74

1357.70

1355.26

167.18

2011-12

167.18

1256.26

1306.57

116.87

2012-13

116.87

960.84

804.66

273.05

2013-14

273.05

872.43

968.24

177.24

2014-15

177.24

1174.35

1218.26

133.33

2015-16

133.33

1216.43

1111.56

238.20

Year

Opening

2005-06