Punjab Chief Minister Amarinder Singh on Monday welcomed the 15th Finance Commission's move to notify a committee to look into the Rs 31,000 crore food account issue between the Punjab government and the Centre.
The Chief Minister said "it could lead to early resolution of the issue related to the legacy debt of Rs 30,584 crore, which was threatening to cascade into a major fiscal crisis for the state."
The committee, to be led by Ramesh Chand, member of the Niti Aayog and the 15th Finance Commission, has been asked to submit its report within six weeks.
The Finance Commission chairman N.K. Singh, at a meeting with the Punjab government on January 30, accepted the gravity of the issue, an official spokesperson said.
"The committee has been mandated to look into all aspects of the legacy debt of the Punjab government arising out of accumulated CCL (cash credit limit) 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 stakeholders and Punjab, thus enabling the state to manage the fiscal challenge arising out of the debt stock and servicing cost due to the legacy debt," the spokesperson said.
"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 per cent of GSDP (gross state domestic product) in 2016-17.
"The debt servicing of this amount would alone amount to Rs 3,240 crore per annum till September 2034. This will result in total outflow of Rs 57,358 crore during the repayment tenure of the loan," the spokesperson pointed out.
The Congress government in Punjab had pleaded the 15th Finance Commission to consider the matter and award a suitable debt relief package to the state.
Punjab is facing severe financial crunch with a mounting debt of over Rs 2.10 lakh crore.
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