Debt-ridden Punjab government 'struggling to pay employees' salaries'

Deputy CM Sukhbir Singh Badal recently said the debt to Gross State Domestic Product ratio had come down drastically

Punjab appears to be in the throes of an economic crisis, with the state government being forced to stop payments of various dues to its employees as there is not enough money in the state's treasury, sources said in Chandigarh on Wednesday.



"The state government has been forced to stop payments of medical and travel bills besides the withdrawals of provident fund. July salary bill amounting to Rs 300 crore is also pending," a source said.



The source added that the government had also put the retirement benefits of its employees on hold by directing the treasury not to release such payments. The financial crisis, the sources said, was because of the increase in salaries and pensions as well as the state's overdraft, which is about to cross its limit.



The Reserve Bank of India has fixed an overdraft limit of Rs 367 crore and the state government has already used up Rs 348 crore. The state is in the process of getting another overdraft, which will take a fortnight to clear. It had also decided to raise a Rs 1,000-crore loan but the process has been delayed.



The number of government employees, including pensioners, in the state is 3.5 lakh. The government had earmarked Rs 15,582 crore for salaries to employees and Rs 5,168 crore for the pension and retirement benefits.



Sources said the financial crisis was the outcome of the growing gap between the revenue receipts and expenditure. For the 2013-14, the state had planned to borrow Rs 9,261 crore, thus the outstanding debt by 2013-14 end will touch the Rs 1,02,282 crore mark with reserve funds and Rs 95,670 crore without reserve funds.



"Inadequate support from the Centre besides the problems of militancy, tax concessions to neighbouring states and the rising commitment of the state for the welfare of the poor have contributed to the increase in the debt," Punjab Finance Minister Parminder Singh Dhindsa said.



Punjab's Deputy Chief Minister Sukhbir Singh Badal had recently said a wrong perception was being created about Punjab's debt and that the debt to Gross State Domestic Product ratio had come down drastically.



Union Minister Manish Tewari had recently accused the Akali-BJP government of pushing Punjab into a debt trap.



"The debt according to its own finance minister is likely to cross Rs 1 lakh crore by the end of this financial year and it is increasing at an alarming rate.The state is dangerously heading towards bankruptcy," Tewari said.



