Chandigarh: India's richest state Punjab, once known as the capital of agricultural invention, is now on the brink of backruptcy.
Banks do not want to give loans to the state for fear of non-payment and the Reserve Bank of India even blacklisted the state government. The state is also facing allegations that Rs 26,000 crore of grain was missing from its godowns.
This is what bankruptcy would mean to Punjab:
# Salaries and pensions worth Rs 1681 crore/month to 4.5 lakh staff could be put on hold.
# Small farmers may not get free crop loans of Rs 50,000 per crop.
# Likely cut in Punjab's health expenditure which is Rs 3295 crore in 2016.
# Rise in unemployment -- 3.65 lakh unemployed youth registered in 2015.
# Major cut likely in Rs 50 crore package for celebrating Guru Gobind Singh's anniversary.
It ultimately took a meeting from Punjab Chief Minister Parkash Singh Badal with Prime Minister Narendra Modi on Monday to force RBI to offer Rs 10,000 crore loan to the state. It was just enough to escape a massive financial crisis.
The state borrowed Rs 18,000 crore to Rs 20,000 crore from the Centre to pay farmers to buy their crops. The Centre reimbursed that from the procurement from the central pool.
The payment is made against the state's bills, but bills have been pending for the last three years. So, the state took the money from banks which remains unpaid. Adding to this, is a decade's worth of unsettled bills.
Meanwhile, the Central Consumer Affairs Ministry is not satisfied with the amounts claimed by the state, both incidental and for transportation.
In an election-bound state, it was just a matter of time before the financial mess assumed political overtones. Both AAP and the Congress are at Badals throat.
Earlier, the state government had mortgaged properties to raise Rs 2100 crore loans to supplement its finances inviting criticism from the opposition.
Parkash Singh Badal in December wrote to Modi saying Punjab', once considered the nation's breadwinner, " has been reduced to the plight of a beggar". But the question is who is responsible for the current plight of Punjab.
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