Beyond the News - FACT Analysis

Considering the huge debt freebees must end in Punjab

Harjap Singh Aujla

The state of Punjab is caught in the web of a crippling debt, which is exacerbated by its own highly unwise policy of offering freebees to a large section of its population. The major culprit in this case is the major political party SAD (B) which wanted never to go out of power. In order to stay in power for a long period of time, it offered free electricity to the irrigation tube-wells and free canal water. When the beneficiaries got hooked to this giveaway, it became impossible to deny this concession to the beneficiaries. The taste of being in power is so addictive that a host of additional freebees were offered from time to time in the form of highly subsidized wheat flour, rice and pulses. Free residential electricity was offered to some scheduled caste and low income families. All these freebees spoiled the habits of the beneficiary voters.

A rich income tax paying city like Delhi can afford to offer such freebees to its poor, because it pays a huge amount of income tax to the centre and gets about 41% back from the centre. Punjab, where 60% of the population is associated with agriculture, which enjoys no taxation, cannot afford to offer any such freebees to any section of the society. Encouraged from the pro-SAD election results again and again, the other parties too got tempted to start offering their own version of freebees, which resulted in more and more debt in the subsequent years. Another drain on the state’s resources is caused by a few lawless consumers of electricity, who through illegal means steal electricity directly from the power distribution lines and thus don’t pay for what they steal. Most of such people have connections with the leaders of the parties in power and neither the electricity authorities nor the police can take any action against them. Such people with complete impunity cause unlimited loss to the state exchequer.

Most of the other states possess enormous reserves of minerals like coal, iron, aluminum and precious metals, but Punjab has none. Punjab’s only material for mining consists of sand and coarse aggregate for buildings. The powerful leaders of the ruling parties have gotten into sand mining business. Though unofficially, they get Goonda Tax from all those trucks, tippers and dumpers that extract sand from the river beds. Normally the government should levy tax on the basis of tonnage extracted, but the government does not get much, only the politicians get most of the spoils. This is another leakage of the government’s legitimate revenue.

Punjab is a big time consumer of liquor. Its distilleries manufacture a lot of alcoholic drinks, but every bottle of liquor is never counted. Truck loads of liquor are smuggled out of the distilleries and breweries. They are sold in grey market. The government gets nothing out of shady deals. Such cheating is done with the connivance to the powerful.

Punjab needs to plug all leakage of revenue and get rid of all the freebees in order to increase its revenue and be in a position to off load its crippling debt. The state needs a friendly centre to partially bail it out of the financial quagmire. At present every party is making tall promises of freebees, which will increase debt. That is not a fiscally responsible way of governance. Let us not be labeled a failed state.

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