AAP In Punjab: Free Power, Higher Pensions And Excess Debt

With the debt burden soaring as high as Rs 3.12 lakh crore and more than Rs 20,240 cr going down annually to fund Aam Aadmi Party’s (AAP) election promise of 300 units of free power to 51 lakh households, the Punjab exchequer is under extreme strain, giving the state a bitter taste of freebies.  

More than 16 months into power, Chief Minister Bhagwant Singh Mann seems to only live through headlines and under media glare, pushing the state into a bigger debt trap through high borrowings to meet expenditures on freebies, the most expensive one relating to the zero-power bill and free water. 

Economists in Punjab fear that freebies are going to ruin the state’s fiscal health as the debt burden is expected to border up to Rs 2.86 lakh crores. The state’s real-time outstanding debt to the gross state domestic product (GSDP) is 46.81 per cent in 2023-24 as compared to 25.45 percent in Haryana.

There are also serious fears that if the government implements the Old Pension Scheme (OPS) — a promise made ahead of Gujarat and Himachal Pradesh polls in November 2022, the state will turn completely bankrupt.

Former Deputy Chairman of the Planning Commission Montek Singh Ahluwalia has described the reintroduction of OPS by some states as an “absurd idea” and a “recipe for financial bankruptcy”.

Government employees are already up in arms alleging delay in implementation of the OPS for which the state government has formed a Cabinet sub-committee for formulating the standard operating procedure for implementing the OPS.

The committees, says AAP Punjab Spokesperson Malvinder Singh Kang, will devise a sustainable model of OPS after conducting studies in the Congress-ruled states of Rajasthan, Chhattisgarh, and Himachal Pradesh. 

“We are committed to implement the promise and want the Centre to return our share paid under the Pension Fund Regulatory and Development Authority (PFRDA),” he says.

Recently in Chandigarh, Union Minister for Information and Broadcasting Anurag Singh Thakur said that there was no provision under the PFRDA Act vide which the accumulated corpus of the subscribers, viz governments’ and employees’ contribution towards NPS along with accruals, can be refunded and deposited back to the state government.

Punjab’s current accumulated corpus with the NPS is Rs 16,746 crore for which the AAP government has asked the PFRDA to refund but the Centre is in no mood to return as is also the case in Himachal Pradesh.

Punjab’s debt is almost 180 per cent of its annual budget, which is itself an alarming sign, which has no strong resource base except tax revenues and grants with no hope of fiscal revival when the Centre has already cut down funding for the state.

Almost 90 per cent of the state’s households are now getting zero electricity bills.

As per the state’s annual budget, a total power subsidy bill of Rs 15,845 crore has been proposed compared to the Rs 13,443 crore in 2021-22. The AAP’s key promise of giving financial assistance of Rs 1,000 every month to all women aged 18 and above is yet to be implemented. There are nearly 1 crore women in Punjab. The government will need another Rs 12,000 crore per annum to fulfil this promise.

Asked about the financial crisis prevailing in Punjab after the freebies promised by the AAP, Malvinder Singh Kang says, “The financial mess created by the earlier government is the primary factor. We have promised to correct the fiscal position and revive Punjab’s economy. Some steps have already been taken. Our excise revenue has increased from Rs 6,700 cr in 2021 to Rs 9,000 cr. The ‘One MLA, one pension’ is a landmark decision. We have also cleared Rs 1,800 cr pending arrears of free electricity.”

Kang accuses the Centre of cutting down grants under the National Health Mission and reducing the loan limits beside several other grants like GST which was Rs 16,000 crore. This is a challenge. Yet the government will go ahead with its promises.

The AAP, among other things, had also promised to make Punjab corruption-free by passing the Jan Lok Pal bill, a complete overhaul of governance and use of technology to eliminate corruption. The anti-corruption drive, however, is limited to Congress leaders.

Its promise to deal with mafias, including the transport mafia, the reta bajri mafia, the liquor mafia, the cable mafia, control by politicians, a debt-free Punjab and wiping out drug cartels have not seen the light of day, admits a senior journalist in Chandigarh.

In the budget for the year 2023-24, the government has also promised to repay Rs 16,626 crore as principal of its debt and Rs 22,000 crore as interest while simultaneously planning to go for more borrowings.

Leader of Opposition Partap Singh Bajwa has been questioning the AAP government’s schemes such as giving Rs 1,000 a month to every woman and increasing pension from the current Rs 1,200 to Rs 2,500 on the grounds that there is an existing cash crunch, making it difficult to meet the monthly salary bills of the employees which remain unpaid for months.