Punjab: Possibility of restoring the reduction in borrowing limit of states last year
Punjab: The cash-strapped Punjab government may get some relief from the central government, which may restore the state’s borrowing limit that was reduced last year. The Centre had cut the limit by Rs 2,387 crore because the Punjab State Power Corporation Limited (PSPCL) incurred losses even after joining the UDAY scheme in 2016. The state was asked to bear 50 per cent of the losses incurred by the discom in 2022-23. The state government had been constantly taking up the issue with the Department of Expenditure, Government of India, and seeking restoration of the borrowing limit. The state has always maintained that the state government is not responsible for the losses incurred by the power utility after 2020-21. In letters written to the Department of Expenditure, the state government has said that the state power utility remained in profit in 2020-21 and 2021-22. The losses for which the state’s borrowing limit was reduced (occurred in 2022-23) were due to the use of expensive imported coal for thermal plants, which the Centre forced the state to buy.
The Department of Expenditure had referred the matter to the Power Ministry. The Power Ministry, in its reply to the Department of Expenditure yesterday, a copy of which is with The Tribune, has admitted that the audited accounts for 2022-23 show an increase of Rs 7,257 crore in fuel and power purchase cost, which has contributed to an 80 per cent increase in expenses in 2022-23. It agreed that the state power regulator had refused to give Rs 2,789 crore to PSPCL as fuel cost and power purchase cost. “In 2023-24, PSPCL recorded a profit of Rs 830 crore due to tariff hike. Thus the cumulative deficit is only Rs 1,431 crore (after UDAY implementation) and there is no revenue gap in 2024-25. Accordingly, the Department of Expenditure may consider allowing the state’s borrowing limit,” the letter said. This is a big relief for the Punjab government, which had recently sought approval to increase the state’s borrowing limit by Rs 10,000 crore over and above the approved borrowing limit of Rs 30,464.92 crore.
