Punjab Governor questions CM Mann and AAP government’s governance and fiscal prudence

Purohit, in fresh letter shot to Mann, accused the AAP government of diverting capital receipts for secret reasons and sought an explanation.

ByAayush Goel

Published Oct 18, 2023 | 12:05 AMUpdatedOct 18, 2023 | 12:13 AM

Punjab Chief Minister Bhagwant Mann, Governor Banwarilal Purohit. (Commons)

Amidst the birthday celebrations of Punjab Chief Minister Bhagwant Mann, Governor Banwarilal Purohit has yet again raised concern over the Aam Aadmi Party (AAP) government’s effective governance and prudent fiscal management.

Purohit, in fresh letter shot to Mann on Tuesday, 17 October, accused the AAP government of diverting capital receipts for secret reasons and sought an explanation. The state government was recently asked, by the Governor in a letter, to explain how it had accrued a debt totaling ₹50,000 crore in the previous 18 months.

Later, in response, the Chief Minister stated that the borrowed funds had primarily been utilised to pay back the loans that the previous administrations had taken out.

‘Asking for the sake of transparency’

Stating that the additional borrowing by the state government has “not been utilised for creation of capital assets”, the Governor has requested an explanation regarding why it has gone beyond what the state Assembly authorised in the budget.

“I am asking this question for the sake of transparency. I assure you that once such a comprehensive picture is available, we can approach the Government of India for appropriate assistance as the Prime Minister has always expressed his commitment for Punjab, as the welfare of its magnificent people is close to his heart,” read the letter.

At the same time, it also advises the Chief Minister that all public borrowings should be carefully done so that the youth of Punjab do not have to suffer owing to such insurmountable debt.

Also read: Punjab Governor objects to special Vidhan Sabha session

‘Burrowing to be used to create assets’

Purohit has advised that borrowings should ideally be used to create capital assets, rather than to implement populist policies. He added that while he agreed that welfare measures should be carried out completely, fiscal prudence requires that these measures be combined with resource mobilisation by reducing pilferages, reducing wasteful spending, and avoiding fiscal profligacy.

CAG report. (Supplied)

CAG report. (Supplied)

“As per the information available, the state government is not managing its fiscal resources in an effective and efficient manner. For instance, in 2022-23, the state government has borrowed ₹33,886 crore, as against the approved amount of ₹23,835 crore, which is over ₹10,000 crore above the amount approved originally by the state Assembly in the budget,” stated the letter.

“This additional borrowing needs to be explained as, apparently, it has not been utilised for creation of capital assets. This is evident from the fact that the effective capital expenditure dropped by over ₹1,500 crore — from a projected ₹11,375.59 crore to ₹9,691.53 crore. Further, the additional borrowing was not even used to discharge legacy interest obligations, as per the figures projected in the revised estimates in this regard,” it added.

“These, in fact, demonstrate that the total payments defrayed on this account during the year finally stood at ₹19,905 crore, as against a projection of ₹20,100 crore in the budgetary estimates for 2022-23,” the letter stated.

Though the Chief Minister’s office is yet to respond, highly-placed sources in the government have said that there was no diversion of capital asset expenditure, but it was used for building schools of eminence, mohalla clinics, and for upgradation of district hospitals.

Also read: 57% of loans incurred in AAP’s tenure spent on repaying debts of previous govts: Punjab CM