Governor to CM Mann, questioning his governance and fiscal prudence

Governor to CM Mann, questioning his governance and fiscal prudence
Chandigarh: Punjab Governor Banwarilal Purohit has told Chief Minister Bhagwant Mann that the performance of the Aam Aadmi Party government in Punjab is causing concern on the issues of efficient governance and fiscal prudence.

In his latest letter written to the CM on Tuesday, a copy of which is with The Tribune, Purohit has also accused the state government of diverting capital receipts for undisclosed purposes and has sought a clarification. The Governor has sought an explanation on additional borrowing by the state government, over and above what was approved by the state Assembly in the Budget, as it has “not been utilised for creation of capital assets”.

“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,” reads the letter, also advising the CM that all public borrowings should be carefully calibrated so that the youth of Punjab are not imperilled by unsustainable debt.

Borrowings should ideally be leveraged for creation of capital assets and not for rolling out populist measures, he has said.

The letter, the second one, written by the Governor to the state government, on the issue of fiscal health of the state, says the state is expected to follow prudent fiscal policies to manage its scarce financial resources. Recently, the Governor had written a letter asking the state government to explain how they have raised debt of Rs 50,000 crore in the past 18 months. The Chief Minister had later replied saying that the borrowed money had been used mostly for repaying the loans taken by the previous governments.

In his letter on Tuesday, Purohit has said, “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 Rs 33,886 crore, as against the approved amount of Rs 23,835 crore, which is over Rs 10,000 crores above the amount approved originally by the State Assembly in the Budget. 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 Rs 1,500 crore – from a projected Rs 11,375.59 crore to Rs 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. These, in fact, demonstrate that the total payments defrayed on this account during the year finally stood at Rs 19,905 crore, as against a projection of Rs. 20,100 crore in the budgetary estimates for 2022-23,” it says.

Apparently, the Governor has also taken feedback from the Comptroller and Auditor General (CAG) of India, who is the custodian of the accounts of Government of India as well of the states. Citing these figures, he has said that it indicates that there is substantial variation in the figures furnished by the CM and the report submitted by the CAG.

Purohit has further said that though he agreed that welfare measures should be implemented comprehensively, financial prudence demands that such welfare measures should be accompanied by fiscal discipline, resource mobilisation from curbing pilferages, cutting down on unproductive expenditure and shunning fiscal profligacy.

Meanwhile, official sources in the state 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.