Under fire for the state's poor fiscal situation, Punjab government today admitted that it is facing a "financial crunch" and described "ballooning" salary and pension bill as its biggest problem.
However, it claimed that Punjab's fiscal position has improved compared to other states like Haryana during the last several years.
"Yes, we usually talk about pending and unpaid government bills in finances...We should accept those shortcomings. When you take steps towards improvement (of fiscal situation), you face some difficulties.
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"We had to face financial crunch for some months after previous central government brought in changes in some policies," state Finance Minister Parminder Singh Dhindsa told reporters here.
He said that after the changes in policy, states could borrow funds only on a quarterly basis.
"Earlier, there was no restriction on borrowing. You could borrow money any time. Usually, we borrow during lean months (June to October)...But then states were asked to borrow quarterly. It has impacted us," Dhindsa said.
Rejecting the opposition Congress's charge of huge debt, Dhindsa said the state government has been able to contain its borrowings successfully.
"If you look at debt to GDP ratio, it has come down from 45 per cent to 32 per cent now," he said, adding that it is wrong to draw inference from the absolute debt figure alone.
"I can confidently say that Punjab's financial position has improved with respect to states like Haryana or others...Punjab is among the 4-5 states which have witnessed improvement in finances in last 10 years," he claimed.
To a query, Dhindsa described the high salary bill as the state's "biggest problem".
"Punjab's biggest problem is high salary of employees. Our salary, pension and retirement benefits bill has reached Rs 28,000 crore and it is growing by Rs 3,000 crore per annum," he said.
The minister blamed declining consumption for the dropping revenue collection.
"Revenue throughout country is on decline. I checked from other states as well. Consumption has overall gone down, which is impacting our VAT revenue growth.
"There is no decline in revenue collection but revenue growth is not as it was expected. Last year, our revenue growth was 6-7 per cent and this year, it will be less than 5 per cent.
"It is not only with Punjab. States like Maharashtra and Jharkhand have also witnessed 1 to 2 per cent growth and it is national phenomena because consumption is going down," he said.
He said that there should not be a big difference in
salaries of employees of states and Punjab will set up a pay commission.
"The terms of reference are being framed. We will remove certain anomalies in salary structure. Hopefully, in one-and-a-half years after the formation of the state pay commission, its report will be out," he said.
To a question on hiring 1.20 lakh people ahead of the 2017 assembly polls, he said that hiring was required in education and health sectors. However, he said the state saves money as it pays consolidated amount to new employees without DA for three years.
He further said that the state-owned PIDB would fund Punjab's share in central schemes for creation of assets which will lead to savings.
To a question, Dhindsa said the state never opposed probe by NIA into the alleged nexus between politicians and drug peddlers.
