The 15th Finance Commission has set up a
committee to examine and resolve Punjab's food legacy issue involving debt of
Rs 31,000 crores following a representation by the state government following
the commission's chairman, N K Singh's recent visit to Chandigarh. The committee, to be headed by Member 15th
Finance Commission and Member NITI Aayog Ramesh Chand, has been asked to submit
its report within six weeks. Other members of the committee include Union
Secretary Food & Public Distribution Ravi Kant; Union Additional Secretary
Department of Expenditure, Ministry of Finance Rajeev Ranjan; Additional
Secretary Department of Financial Services Minister of Finance Ravi Mittal and
Chief Secretary Punjab Karan Avtar Singh. Joint Secretary of the 15th Finance
Commission Ravi Kota would be its Member Secretary. The Committee has been mandated to look into
all aspects of the Legacy Debt of Punjab Government arising out of accumulated
CCL (Food Credit Gap) with reference to Food Corporation of India/Department of
Food and Public Distribution. The Committee would also recommend contours of
suitable resolution that would be fair and appropriate to all the stakeholders
and the Punjab State, thus enabling the state to manage the fiscal challenge
arising out of the debt stock and servicing cost due to the legacy debt. On current accumulation of CCL gap (debt flow
issue), the Committee has been asked to examine the current issues (other than
Legacy Debt Burden) related to the CCL Gap in order to ascertain the root
causes for such gap. It would also recommend appropriate measures to overcome
the causes identified, so as to ensure the CCL gap does not exist in the
successive procurement seasons. The legacy debt was created by the erstwhile
SAD-BJP government which, in the last leg of its tenure, had persuaded the
Centre to convert the CCL gap into a clean long term loan for the state. This
inflated the state’s fiscal deficit to 12.34 % of GSDP in 2016-17, and the debt
servicing of this amount would alone amount to Rs. 3240 crore per annum till
September 2034. This will result in a total outflow of Rs. 57,358 crore during
the repayment tenure of the loan. The State Government had pleaded that the
15th Finance Commission should sympathetically consider the matter and award a
suitable debt relief package to the state, which was facing a scenario worse
than a debt trap, with debt servicing liability more than the gross borrowing.
This would lead to the dilution of the state government’s development
expenditure.
Punjab's food legacy debt: committee constituted
By IndianMandarins - 2019-02-11 11:18:45
The 15th Finance Commission has set up a
committee to examine and resolve Punjab's food legacy issue involving debt of
Rs 31,000 crores following a representation by the state government following
the commission's chairman, N K Singh's recent visit to Chandigarh.
The committee, to be headed by Member 15th Finance Commission and Member NITI Aayog Ramesh Chand, has been asked to submit its report within six weeks.
Other members of the committee include Union Secretary Food & Public Distribution Ravi Kant; Union Additional Secretary Department of Expenditure, Ministry of Finance Rajeev Ranjan; Additional Secretary Department of Financial Services Minister of Finance Ravi Mittal and Chief Secretary Punjab Karan Avtar Singh. Joint Secretary of the 15th Finance Commission Ravi Kota would be its Member Secretary.
The Committee has been mandated to look into all aspects of the Legacy Debt of Punjab Government arising out of accumulated CCL (Food Credit Gap) with reference to Food Corporation of India/Department of Food and Public Distribution. The Committee would also recommend contours of suitable resolution that would be fair and appropriate to all the stakeholders and the Punjab State, thus enabling the state to manage the fiscal challenge arising out of the debt stock and servicing cost due to the legacy debt.
On current accumulation of CCL gap (debt flow issue), the Committee has been asked to examine the current issues (other than Legacy Debt Burden) related to the CCL Gap in order to ascertain the root causes for such gap. It would also recommend appropriate measures to overcome the causes identified, so as to ensure the CCL gap does not exist in the successive procurement seasons.
The legacy debt was created by the erstwhile SAD-BJP government which, in the last leg of its tenure, had persuaded the Centre to convert the CCL gap into a clean long term loan for the state. This inflated the state’s fiscal deficit to 12.34 % of GSDP in 2016-17, and the debt servicing of this amount would alone amount to Rs. 3240 crore per annum till September 2034. This will result in a total outflow of Rs. 57,358 crore during the repayment tenure of the loan.
The State Government had pleaded that the 15th Finance Commission should sympathetically consider the matter and award a suitable debt relief package to the state, which was facing a scenario worse than a debt trap, with debt servicing liability more than the gross borrowing. This would lead to the dilution of the state government’s development expenditure.
