A ‘white paper’ presented by the Bhagwant Mann government in the Punjab Assembly on Saturday said the state is in an “economic morass and debt trap”.

The ‘white paper’ on state finances presented by finance minister Harpal Singh Cheema blamed previous governments for the fiscal mess.

It said the previous governments, instead of applying necessary correctives, continued to slip into fiscal profligacy, as evident from the unchecked increase in unproductive revenue expenditure, freebies and unmerited subsidies, virtual collapse in the capital and social sector investments vital for future growth, and non-realization of its potential tax and non-tax revenues.

“The White Paper on the state finances is an attempt to simplify the complex issues/problems being faced by the Punjab government in the field of finance, which has become grave over time due to imprudence of governments of the past,” said the 73-page document.

It said the current effective outstanding debt of Punjab stands at Rs 2.63 lakh crore, which is 45.88 percent of the State Gross Domestic Product (SGDP).

“The current debt indicators of the state are probably the worst in the country, pushing it deeper into a debt trap,” the white paper said.

The previous government professed to bring fiscal prudence to the management of state finances while discreetly choosing not to discharge the pending liabilities of the state government, it said.

Sadly, they have also followed their predecessors and while demitting office, handed over the immediate and medium-term staggering liability of Rs 24,351.29 Crore that the new government has to discharge over the coming years, said the document.

In the last five years, the debt of the state has grown by 44.23 percent translating into a compounded growth rate of 7.60 percent per annum.

It pointed out that the outstanding debt of the state has increased from Rs 1,009 crore in 1980-81 to Rs 83,099 crore in 2011-12 and further to Rs 2,63,265 crore in 2021-22.

To revive Punjab to its old glory days, a serious relook into the expenditure commitments coupled with direct revenue enhancement measures needs to be done, the white paper said.

To consolidate the state finances, fillip economic revival and growth, and reduce reliance on debt, structural and policy initiatives are required with unheard levels of ground-level enforcement, the document suggests among the corrective measures.