Cloud over Punjab

The sacking by Punjab chief minister Parkash Singh Badal of his nephew and the state’s finance minister Manpreet Badal from the cabinet and his suspension from the Akali Dal may be explained in terms of personal and party politics. But the confrontation between Badal and the party on one side and Manpreet on the other has lessons that go beyond. Badal, like Shiv Sena chief Bal Thackeray, may have felt that his nephew would pose a challenge to his son and deputy chief minister Sukhbir Singh Badal to whom he wants to hand over the party and government. Cutting the nephew to size was therefore in Badal’s personal and political interest.

But the issue on which Manpreet was sacked might make him a martyr and a stronger champion of public interest. Punjab has a massive public debt of Rs 70,000 crore, incurred as a result of spendthrift government policies, subsidies, loan waivers and other freebies. As finance minister Manpreet found that the situation was unsustainable and wanted to accept a Central offer to waive half the debt in return for rational and sensible government policies. This would have meant reducing many sops to farmers and other interest groups. The Akali Dal has its base in the peasantry and its government partner, the BJP, has its base in the business class. Alienating these groups is politically difficult for the parties, especially for the Akali Dal. Action against a person who advocated a cut in the sops would itself further strengthen Badal. But the state may soon find itself in an impossible situation where it would have no money left after payment of salaries and debt servicing.

Punjab, which was once the richest and the most prosperous state, has been reduced to near bankruptcy. Many other states are also in much the same situation. Karnataka too has a high public debt. The RBI report on state finances has drawn attention to their rising public debt and interest burden, stagnant tax-GDP ratio, falling non-tax income and increasing non-Plan expenditure. The solutions prescribed by the RBI are politically unacceptable for most governments because they involve withdrawing many sops and concessions and tightening the belt. But the remedies will become more painful with the passage of time. Badal, and many other chief ministers, are only delaying the inevitable to a future date when a higher price may have to be paid for their present refusal to take the right action.