15TH FINANCE COMMISSION NOTIFIES COMMITTEE TO RESOLVE RS. 31000 CR FOOD ACCOUNT LEGACY ISSUE
CAPT AMARINDER WELCOMES MOVE, HOPES OF EARLY RESOLUTION OF LEGACY DEBT
CHANDIGARH, FEBRUARY 11:
Punjab Chief Minister Captain Amarinder Singh’s persistent efforts to resolve the pending Rs. 31000 crore food legacy issue on Monday bore fruit with the 15th Finance Commission setting up a committee to examine and resolve the matter.
Commission chairman NK Singh, who had during a recent meeting with the Punjab Government conceded the gravity of the issue, today gave approval to the issuance of the notification for the constitution of the committee, an official spokesperson said.
The Chief Minister has welcomed the move, expressing the hope that it would 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 Member 15th Finance Commission and Member NITI Aayog Ramesh Chand, has been asked to submit its report within six weeks.
Other members of the committee include Union Secretary Food & Public Distribution Ravi Kant; Union Additional Secretary Department of Expenditure, Ministry of Finance Rajeev Ranjan; Additional Secretary Department of Financial Services Minister of Finance Ravi Mittal and Chief Secretary Punjab Karan Avtar Singh. Joint Secretary of the 15th Finance Commission Ravi Kota would be its Member Secretary.
The Committee has been mandated to look into all aspects of the Legacy Debt of Punjab Government arising out of accumulated CCL (Food Credit Gap) 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 the stakeholders and the Punjab State, thus enabling the state to manage the fiscal challenge arising out of the debt stock and servicing cost due to the legacy debt.
On current accumulation of CCL gap (debt flow issue), the Committee has been asked to examine the current issues (other than Legacy Debt Burden) related to the CCL Gap in order to ascertain the root causes for such gap. It would also recommend appropriate measures to overcome the causes identified, so as to ensure the CCL gap does not exist in the successive procurement seasons.
During the Commission’s recent visit to Punjab, the Chief Minister had brought to its notice the seriousness of the potential outcome of the legacy debt, triggered by accumulated CCL gap in a span of more than a decade related to procurement of food grains for the Central pool in Punjab. 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 % of GSDP in 2016-17, and the debt servicing of this amount would alone amount to Rs. 3240 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 State Government had pleaded that the 15th Finance Commission should sympathetically consider the matter and award a suitable debt relief package to the state, which was facing a scenario worse than a debt trap, with debt servicing liability more than the gross borrowing. This would lead to dilution of the state government’s development expenditure.