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Politics Punjab bleeding itself to stay afloat

Discussion in 'Breaking News' started by Archived_Member16, Aug 25, 2009.

  1. Archived_Member16

    Archived_Member16
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    Punjab bleeding itself to stay afloat

    Rs 400 cr worth of govt securities sold every month

    Deprived of cash flow and faced with a huge subsidy bill, the cash-strapped Punjab government has virtually been selling off over Rs 400 crore of its government securities each month this year, in order to stay afloat.

    Since January 2009, the Punjab government has raised Rs 3,458 crore by getting its state development loans (SDL) auctioned through the Reserve Bank of India (RBI). This is not all; Punjab plans to raise Rs 5,000 crore through selling its SDL during this financial year.

    In this fiscal alone (since April 2009) Punjab has auctioned its state development loans worth Rs 1,743 crore. With the state government facing additional liability on account of the implementation of recommendations of the Fifth Pay Commission from this month onwards, the state will be raising Rs 500 crore through yet another auction of its SDL by the RBI on August 25.

    In spite of the limited resources to raise money, Punjab has a huge annual subsidy bill of Rs 4,500 crore. With the power subsidy bill going up to an astounding Rs 3,142 crore (up from Rs 2,602 crore last year), and no signs of an increase in its revenue, the state is relying heavily on these SDLs to raise money.

    Other than the power subsidy, the state government also subsidises the Local Bodies Department for octroi, sewerage and house tax, besides subsidising its populist ‘atta-dal’ scheme. While the government spending is on the rise, revenue growth is barely over 5 per cent for this year.

    Talking to The Tribune, Punjab Finance Minister, Manpreet Badal, agreed that the huge subsidy bill of the state was responsible for such heavy borrowings. “Though we are within our prescribed borrowing limit of 3.5 per cent of the gross state domestic product (GSDP), the fact is that we will need more money this year as the power subsidy bill.” It is estimated that the power bill will increase by Rs 542 crore this year on account of increase in per unit cost of power by about 40 paisa.

    Official sources in the RBI informed The Tribune that these state development loans are auctioned by various state governments to raise money for their development activities. Generally, banks bid for these loans as they are supposed to invest a certain prescribed percentage of their funds in government securities. Since this investment in government stocks is reckoned as an eligible investment in government securities by banks for the purpose of Statutory Liquidity Ratio (SLR), banks participate in these auctions. These stocks also qualify for ready forward facility.

    Money raised through sale of state development loans during the current fiscal

    n April 2009: Rs 143.05 crore
    n June 2009: Rs 500 crore
    n July 2009: Rs 500 crore n August 2009: Scheduled for auction on August 25 (expected to raise Rs 500 crore)
    n Total money to be raised in this fiscal: Rs 5,000 crore

     
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  3. Gyani Jarnail Singh

    Gyani Jarnail Singh Malaysia
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    DRUG ADDICTS..do that..sell their BLOOD to survive...
    Since the Punjab is awash in drugs..and 90% of its population is on drugs...how can the Govt be any different ?? SELL SELL..Govt buildings, Punjab Roadways..Bus Stations, Heritage buildings..lands..panchiyat offices..any takers..??

    Last I heard...Badal govt even wanted to "sell" off the Golden Doors of Darshni deodhi Harmandar sahib Amrtisar ( these historic Doors originally belonged to Somnath mandir and were looted by Mohd Gauree..and taken to Afghanistan...later on Maharaja Ranjit Singhs armies retrieved them back..and offered to place them back in Somnath..BUT the Pujarees REFUSED them saying these are POLLUTED by the touch of the Muslims...and so the Maharaja gave them to Darbar Sahib to be refurbished and installed at Darshni deodhi...and ..then PM Morarji Desai some years back wanted them back for somnath...but failed..now the RSS wants them back through the backdoor of badal !!).

    PUNJAB is in a deep PIT..no way but DOWN...deeper and deeper...the best hardworking people migrating overseas...the Burning and looting mobs that can pour out onto the streets within "minutes" to loot and burn public properties..rails, buses, shops and bring all to a Grinding Halt are left behind...rest are in Deras..looking for shortcuts, magic potions...or visa to go abroad...
     
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  4. AusDesi

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    Do you honestly think these things in govt hands were better? Im not talking of heritage buildings etc but things like buses, bus stations etc.

    I believe no gov should sell water, electricity or food to private companies but other than that things would run much better if things were in private hands.

    EDIT - I remember there was joke by Bhagwant Mann which said that if you put Sarkari next to a fan, even the fans stops working.
     
  5. Sinister

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    About the auctioning of the debt through Reserve Bank of India... How does the Punjab government go about selling its debt obligations? Im assuming the sdl's are organized into state bonds?

    id like some more info, are these for institutional investors, other government/federal treasuries or are they auctioned to citizens only within punjab? are they auctioned abroad?

    just more information about the units? what rate of return they are yeilding? how safe are they? when particular units hit maturation are the debt rollover numbers good for the punjab government ?

    who knows, may make a good investment oppurtunity ...provided we get more details.
     
  6. Sinister

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    i agree with everything except electricity....Electrical Energy is the first thing that needs to be privatized in Punjab... cause right now...nobodies gettin any ...how much worse can it get? the power grid is an aging archaic system of old worn out and highly inefficient transformers, lines and powerplants. The grid cant handle the tremendous overload which leads to routine rolling blackouts in even the largest cities.

    if you introduce profit into the equation for every second the line is down the producers will be losing valuable $$$ which at least gives incentive to produce and supply more energy and distribute it with more efficiency.

    but on the flip side prices would go up and there would be more price fluctuations if adequate competition is not promoted...which happens alot ive noticed (especially when businesses get powerful enough to start lining the pockets of politicians more than their competitors). bad for the poor but then again they dont get any electricity under the current system anyway (the ones that do usually steal it).


    That power subsidy bill valued at 3400 crore is an absolute SHAME!!! The government is suppose to promote efficiency how is a subsidy of that size going to help?
    (this i assume is to win votes within the farming community... water motors (pumps) running free of charge day and night)...the water is free now the electricity use to pump the water from the ground is free....the creation of an environmental disaster?

    RIDICULOUS!
     

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