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AAP’s promises of free power & aid to women could cost debt-ridden Punjab Rs 20,600 cr/year

Punjab officials & experts say giving 300 units of electricity free & providing Rs 1,000/month to each woman a big challenge, given existing debt burden of Rs 2.82 lakh crore.

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Chandigarh: The two most prominent promises of the Aam Aadmi Party (AAP) in Punjab 300 units of free electricity per month for every household, and financial assistance of Rs 1,000 for every woman are likely to put an additional financial burden of at least Rs 20,600 crore on the state, senior government officials have told ThePrint.

The AAP came to power in Punjab on 10 March with a thumping majority of 92 out of 117 seats in the state assembly.

During a roadshow in Amritsar on 13 March, the party’s national convener and Delhi Chief Minister Arvind Kejriwal announced that all poll promises will be fulfilled. However, senior Punjab government officials and policy experts said the additional financial burden could be a big challenge in light of the existing debt burden of Rs 2.82 lakh crore on the state.

On 29 January, Kejriwal had also announced that no new tax will be imposed if the AAP comes to power in Punjab.

ThePrint sought comments from AAP spokespersons, through calls and messages, on how the party plans to work out these two key promises financially, but did not get a response till the time this report was published.

Also Read: Prodded by Bhagwant Mann, AAP Punjab MLAs rush to constituencies, focus on schools & hospitals

Power promise to hike subsidy bill by ‘at least Rs 5,000 crore’

Citing power department data, a senior state government official, who did not wish to be named, told ThePrint Monday that the state has around 73 lakh domestic electricity consumers, 14 lakh agricultural consumers (for whom electricity is completely free), 11.50 lakh commercial consumers and 1.50 lakh industrial consumers.

Roughly 15 per cent of the domestic consumers are households categorised as Scheduled Caste (SC), Backward Class (BC) and Below Poverty Line (BPL), which avail 200 units free electricity, the official added.

For the 2021-22 financial year, the total power subsidy bill of the state was Rs 10,668 crore, according to government records. Of this amount, Rs 7,180 crore went towards subsidy to farmers, and Rs 1,627 crore towards subsidy to SC, BC and BPL households.

The rest of the subsidy bill, according to the senior official, largely relates to discounted rates of electricity per unit already availed by households as well as various categories of industries.

“The 300 units of free electricity every month scheme, as the AAP has announced, is supposed to cover all households in the state. Even by the most conservative estimates, it will increase the subsidy bill by at least Rs 5,000 crore,” the official said.

Financial aid to women ‘likely to cost another Rs 15,600 crore’

Meanwhile, financial assistance of Rs 1,000 per month for every woman (aged 18 years and above) in the state is likely to create an additional financial burden of Rs 15,600 crore, another senior Punjab government official told ThePrint. 

Citing electoral roll data, the official said Punjab had 1.3 crore (13 million) women voters.

“It is a plain calculation, if all the 1.3 crore women are to be given Rs 1,000 per month, it will lead to a financial burden of Rs 15,600 crore annually. We are not sure if in the coming weeks the government will decide on tweaking the scheme and keeping it open only for certain social and economic groups,” the official added.

Punjab’s CM-designate Bhagwant Mann had, in his election campaign, blamed previous governments led by the Congress and the Shiromani Akali Dal (SAD) for the state’s financial woes, claiming that Punjab was a budget-surplus state before that. 

The outgoing Congress government had a projected debt burden of at least Rs 2.82 lakh crore till the end of its term. When it came to power in March 2017, it had inherited Rs 1.82 lakh crore in outstanding debt from the previous SAD-BJP government.

Mann had also promised that the AAP will implement a pro-Punjab financial model to make Punjab a budget-surplus state, citing the example of Delhi, which has maintained a revenue surplus since 2013-14. The AAP came to power in Delhi in 2015 with a full majority, having previously run a government with outside support from the Congress for 49 days in 2013.

‘Massive challenge’

According to Ram Singh Ghuman, professor at Amritsar’s Guru Nanak Dev University, the AAP government will confront a “massive challenge” on the financial front.

“According to my estimates, if the government achieves 100 per cent success rate in plugging leakages and controlling evasions, at this stage, it can mobilise another Rs 38,500 crore without imposing additional taxes,” Ghuman told ThePrint.

“The break-up, according to my estimates, would be Rs 5,000 crore more from excise duty, Rs 9,000 crore more from GST, Rs 3,000 crore more from mining, Rs 2,000 crore more from stamp and registration fee, Rs 3,000 crore more from property tax, Rs 1,500 crore more from professional tax, Rs 1,500 crore from cracking down on power theft, Rs 2,500 crore more from transport and cable, Rs 1,000 crore more by checking pilferages in social security schemes and another Rs 10,000 crore more can be mobilised through rationalising the current tax structure and checking discretionary spendings by chief minister, cabinet ministers and MLAs,” he added.

However, even then it would be difficult, Ghuman said.

“The state spends roughly 20 per cent of its revenues on public-debt interest payments. And then there is the principal debt amount, which together with the interest amount, makes the total debt servicing,” the professor continued.

For 2021-22, Punjab’s estimated revenue receipt is Rs 95,257 crore, of which around 40 per cent would go into debt servicing, according to government records.

(Edited by Gitanjali Das)

Also Read: Not Mamata, not KCR, not Stalin — few opposition leaders have congratulated Kejriwal for AAP win


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