Who’s to blame for Puducherry’s financial crisis?

Kavita Kishore
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Union Minister of State Narayanasamy defends Central government

V. Narayanasamy
V. Narayanasamy

Is it time the Puducherry Government released a white paper on its finances?

Every now and then, including in the Assembly, Chief Minister N. Rangasamy blames the Centre for not providing adequate funds to further the growth and development of the Union Territory. Immediately afterwards, Union Minister of State for Prime Minister’s Office V. Narayanasamy holds a press meet to put the blame back on the Puducherry Government for the deep financial mess it is in.

Somewhere in between the lines spoken by the two leaders, the mainstays of Puducherry politics are the actual numbers – muddled and mired in vocal politics.

While the government has resorted to large scale retrenchment of workers as it can’t even pay wages, the opposition parties have pinned down the government for not fulfilling any of its election promises since it came to power.

What is in black and white though is – there are not enough funds. Forget growth and development for now. Surprisingly, none of the Opposition parties are yet to even ask for a white paper on finances in the interest of people.

On Sunday, in yet another of his press conference to counter the Chief Minister’s charges against the Centre, Mr. Narayanasamy said the UT’s financial crisis was the making of its own.

“It was a result of increase in expenditure. And failure to mobilise funds,” he charged, reeling out statistics, which at times may sound valid. In 2012-13, the Puducherry Government used only 46 per cent of the allotted funds. Its failure to spend Rs. 1600 crore was the reason for a smaller plan size this year, he said firing his first salvo on Sunday.

As usual, the Congress-led United Progressive Alliance was once again, the generous big brother. “Under the Central Assistance Scheme, the Centre has increased the funds to Rs. 620 crore this year from Rs. 379 crore last year - a 117 per cent increase. This shows that there is no discrimination,” he said.In the Assembly, Mr. Rangasamy had charged the Centre for rejecting the UT’s proposal to obtain Rs. 800 crore from the World Bank loan towards Cyclone Thane funds. “This is not a fact,” Mr. Narayanasamy said. “The UT can obtain loans of up to 20 per cent of its Gross State Domestic Product (GSDP). Puducherry, however, had already borrowed loans of up to 40 per cent of the GSDP – the highest for any State in the country,” he added.

While the loans of all other States were under 21 per cent of their GSDP, Puducherry had crossed that mark in 2010 with a loan component of 26 per cent. This year, the Reserve Bank data has revealed that the UT’s loans were close to 40 per cent of its GSDP, he argued.

In order to continue to mobilise funds, the Planning Commission had recommended that the government apply for Rs. 500 crore loan through the open market and Rs. 239 crore through negotiated loans from NABARD, HUDCO and other such agencies rather than approaching the World Bank, Mr. Narayanasamy said, suggesting a way forward.

At the same time, he accused the government for managing only Rs. 65 crore through negotiated loan and not taking any steps for market borrowing. Already, the Chief Minister has made it clear that his government was not for borrowing any more.

Fiscal deficit

“The fiscal deficit of the UT is also higher than all other States. While states had a fiscal deficit of three per cent, it was over five per cent in the UT,” Mr. Narayanasamy said.

When the government approached the Planning Commission with the draft budget, the Commission had made nine observations, which included the slow implementation of major public works, public health, housing, tourism and fisheries projects.The commission had also asked the government to complete these projects in a time bound manner.

The government was also asked not to divert funds from centrally sponsored teams for other uses.

With all these factors against them, it was unfair for the Puducherry government to blame the Centre for the current difficulties in the UT, he said.




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