Cash strapped Punjab govt forced to mortgage mental hospital to raise money


Inmates of a mental hospital in Amritsar or of an old-age shelter home for widows may not have much to do with assembly elections in Punjab but the premises where they live certainly has. These are among the properties that the Punjab government has pledged to various banks to secure loans to keep its populist schemes and election-year promises stay afloat.

Sources in the cash-strapped Punjab government say that several properties and land are either being sold or mortgaged to banks by the Shiromani Akali Dal-BJP alliance government led by Chief Minister Parkash Singh Badal. Under the Badal government’s Optimum Utilization of Vacant Government Land (OUVGL) scheme, nearly Rs 4,700 crore ($700 million) is expected to be raised by selling 130 properties across Punjab by terming them “non-productive”.

“The state government is virtually working by the day in matters of funds. Even giving salaries and pensions is a burden every month and a lot of jugglery and falling back on loans and selling properties are being resorted to,” a senior bureaucrat told IANS here, on strict condition of anonymity.

With the ruling alliance already in election mode for the February-March 2017 assembly polls, the financial pressure on the Badal government is going to increase in the coming months with more populist schemes – like filling over 113,000 vacancies in the government – being announced.

In its latest move, the Badal government has offered to mortgage jail complexes, a mental hospital in Amritsar, home for widows (Gandhi Vanita Ashram) in Jalandhar, office and court complexes in districts and some urban enclaves in cities and towns.

“In all, through the mortgage of these properties, the Badal government is mobilising funds worth Rs 2,100 crore,” a senior officer in the finance department told IANS.

The properties now being mortgaged by the Punjab government include the old offices of the deputy commissioner and SSP and PWD office in Patiala (to Bank of Baroda for Rs.350 crore); the PUDA Enclaves in Jagraon and Budhlada and Rajpura Colony in Patiala district (to Canara Bank for Rs.750 crore), Green Park Enclave-Ludhiana, Jail site-Jalandhar and Mental Hospital-Amritsar (mortgaged to Punjab and Sind Bank for Rs. 400 crore), old district court complex-Ludhiana and Canal Colony-Ludhiana (to Bank of India for Rs.500 crore) and Ranjit Avenue site in Ludhiana (to Andhra Bank for Rs.100 crore).

“The Punjab government is building castles in the air. The state has a debt of Rs 1.25 lakh crore. All circuit houses have been mortgaged. The government is unable to pay installments (for loans),” Congress leader Raj Kumar Verka said.

The Punjab Urban Development Authority (PUDA), the state government’s agency entrusted with creating urban infrastructure, especially housing for people, has been mortgaging its properties, including its headquarters in Mohali, to raise money for the state government.

The OUVGL scheme was started in 1997 when Badal returned to power (1997-2002) in the state after a long gap. He has been chief minister here since March 2007.

Earlier this year, the Comptroller and Auditor General (CAG) had pointed to heavy borrowings by PUDA and other agencies to raise money for the government.

With farmers, employees and others breathing down the neck of the Badal government, things are not going to be easy for it as the state gets into the run-up for the assembly polls.

Punjab cabinet minister Sikander Singh Maluka defended the sale and mortgaging of properties.

“The speed at which we are going in for development in Punjab, we need money. It has to be arranged from somewhere. We are sure that Punjab will soon be back on its feet and all the mortgaged properties will be released,” Maluka said.

On the defensive over recent reports of financial mess and the mortgaging and selling spree, the Punjab government claimed that there was no financial crunch.

“There is no financial crunch in the state and the government is generating sufficient resources to meet its commitment for salaries and other development expenditure,” a spokesman said here this week.

“No loan was raised by PUDA which was used for meeting the committed expenditure of the Punjab government. The state government has been paying monthly salaries to the staff, including pensions, in time out of its own resources. No money has been borrowed for the purpose of meeting committed expenditure on salaries and pensions by mortgaging government property,” he added.