Wrong policies to blame for fiscal mess, says economist
Thursday, 02/08/2012
http://www.tribuneindia.com/2012/20120802/punjab.htm#1
M. Gobinda Rao, member of Economic Advisory Council to the Prime Minister, has blamed the alleged wrong policies of the Punjab Government for the state's poor fiscal health.
Rao, who is also the Director of National Institute of Public Finance and Policy, New Delhi, delivered a lecture on 'State Level Fiscal Policy: Important Issues' at the Punjabi University here today.
Criticising the Punjab Government's free power policy for tubewells, he said: "Politics of populism cannot help in improving any state's financial condition. This lack of foresightedness will rather push the future generations into indebtedness."
Citing Gujarat's example, Rao said though Narendra Modi was charging for electricity, he ensures the state people get what they pay for. On the other hand, Punjab claims to be providing free power to farmers, but the community hardly gets it, he claimed. "Such policies can be detrimental for the fiscal health of any state," he said.
Another issue of concern, he said, was states taking to "blackmail politics". "While West Bengal Chief Minister Mamata Banerjee has been demanding a bailout package, Punjab has been blaming the Centre for its fiscal woes. This is unjustified. Despite recommendations, Punjab has not bothered to either generate revenue or raise user charges and taxes and contain subsidies. Why should a national taxpayer pay for the lethargy of the Punjab Government?" he questioned.
The expert on economy claimed that in the 1990s, the tax revenue to gross domestic product ratio of Punjab was 10, but now it had come down to around seven, which was a "cause for concern".
"Punjab should focus on generating revenue. The industry is moving out from the state as there is no proper plan for the sector. The state should seek central help only after preparing a plan on how it wants to spend this money and also justify its expenditure. Relying merely on central assistance will not solve any purpose," he said.
