Punjab Governor Banwarilal Purohit has expressed his concerns to Chief Minister Bhagwant Mann regarding the performance of the Aam Aadmi Party government in Punjab. These concerns centre around issues related to effective governance and fiscal responsibility.
In his most recent letter to the CM, dated Tuesday, Purohit also accuses the state government of diverting capital receipts for undisclosed purposes and requests clarification on this matter. The Governor has specifically sought an explanation regarding the additional borrowing undertaken by the state government, exceeding what was originally approved by the state Assembly in the budget. This excess borrowing was not utilized for the creation of capital assets.
The letter reads, “I am raising this question in the spirit of transparency. I assure you that once we have a comprehensive understanding of this situation, we can approach the Government of India for appropriate assistance. The Prime Minister has consistently expressed his commitment to Punjab, as the welfare of its remarkable citizens is close to his heart.” Purohit also advises the CM that all public borrowings should be meticulously planned to avoid imposing unsustainable debt on the youth of Punjab. Ideally, borrowing should be directed towards the creation of capital assets rather than for implementing populist measures.
This letter, the second of its kind from the Governor to the state government, emphasizes the importance of prudent fiscal policies for managing the state’s limited financial resources. Earlier, the Governor had inquired about the state government’s accumulation of Rs 50,000 crore in debt over the past 18 months, to which the Chief Minister had responded that the borrowed funds were largely used to repay loans from previous administrations.
In his latest letter, Purohit points out that, according to available information, the state government has not been effectively managing its fiscal resources. For instance, in the fiscal year 2022-23, the state government borrowed Rs 33,886 crore, exceeding the approved amount of Rs 23,835 crore by over Rs 10,000 crore, as originally sanctioned by the State Assembly in the budget. This additional borrowing requires explanation, as it appears it was not used for creating capital assets.
This is evident from the fact that effective capital expenditure dropped by over Rs 1,500 crore, from a projected Rs 11,375.59 crore to Rs 9,691.53 crore. Furthermore, this additional borrowing was not utilized for discharging legacy interest obligations, as per the figures outlined in the revised estimates. The total payments made in this regard during the year amounted to Rs 19,905 crore, as opposed to the projected Rs 20,100 crore in the budgetary estimates for 2022-23.
The Governor seems to have also consulted with the Comptroller and Auditor General (CAG) of India, who oversees the accounts of both the Government of India and the states. Purohit references these figures to highlight the significant variation between the CM’s statements and the CAG’s report.
Purohit emphasizes that while he acknowledges the importance of comprehensive welfare measures, fiscal prudence necessitates that such measures be accompanied by fiscal discipline, resource mobilization through reducing pilferage, cutting unproductive expenditure, and avoiding fiscal extravagance.
Meanwhile, official sources within the state government have countered claims of capital asset expenditure diversion, stating that the funds were used for constructing distinguished schools, mohalla clinics, and upgrading district hospitals.
