M A I N   N E W S

Rs 150 crore taxes in Punjab Budget
Tribune News Service

CHANDIGARH, March 22 — The Punjab Finance Minister, Capt Kanwaljit Singh, today proposed several taxes in the Budget for the year 2000-01 presented in the Vidhan Sabha, with the central theme to restore the financial health of the state and put it back on the high growth path. The taxes will net over Rs 150 crore, approximately. The Budget adds up to Rs 21,124 crore, as compared to Rs 19,626 crore in 1999-2000 (revised estimates). The Budget is unique in several respects. It sets a new trend because “the budget looks beyond the time horizon of a year”. It signals a strategy for fiscal management to usher in a new era of sustained economic growth. The Budget envisages a sustained annual growth of 8 per cent in the medium term.

Finance Minister Kanwaljit Singh presents the Punjab Budget in the Vidhan Sabha on Wednesday. — Tribune photo by Pankaj Sharma

This is sought to be achieved by leaving the deficit (closing balance) of (-) Rs 498.35 crore uncovered. Nevertheless this gap is to be bridged by effecting economy in expenditure and by hoping to get increased additional devolution of funds from the Centre, as recommended in the interim report by the 11th Finance Commission. Together these two are expected to provide for Rs 500 crore approximately.

The Budget speech of the Finance Minister revealed that state’s Annual Plan, 2000-01, has been pegged at Rs 2,700 crore as against Rs 2, 680 crore for the current year. This plan would be financed to the extent of Rs 2,131.60 crore from the state’s own resources and Central assistance to the tune of Rs 568.40 crore. In fact the Annual Plan will be funded from borrowings or fresh debt. This is likely to further push the state into a deeper debt-trap.

The entire financial picture has been exposed to the Vidhan Sabha and the people of Punjab by way of explaining what went wrong where and why and how the SAD-BJP Government proposed to apply the correctives and reverse the downhill slide. Besides taxation and financial proposals, aimed at fetching Rs 100 crore, the Budget spells out means to compress expenditure. It also shows how it was proposed to introduce an inbuilt system of accountability when it came to public expenditure in the socio-economic sector, in terms of social and physical infrastructure built-up, remodelling of the public sector undertakings and, for the first time, taking due care of all the pension beneficiaries by creating a special “social security fund” with an annual corpus of Rs 200 crore.

There is also to be an expenditure commission, and a disinvestment commission to give effect to the proposals elucidated by the Finance Minister, who laid added emphasis on agriculture (to which he sought to give a “second push”) and allied sector (dairy and livestock).

To promote infrastructural development, Capt Kanwaljit Singh has listed 12 major projects pertaining to roads and bridges, which would involve an expenditure of Rs 1,737 crore. This is out of the purview of the Budget. The expense is to be met from the infrastructure development fund to be operated by a board, which will raise money through financial institutions and private entrepreneur. In fact services of an ex-IAS officer, Mr S.C. Sinha, a former Managing Director of the Maharashtra State Road Development Corporation, have been requisitioned for time-bound execution of the projects, which are likely to be completed by June 30, 2002.

Since measures for additional resource mobilisation alone would not be enough to achieve the objective of fiscal consolidation, the Finance Minister proposed the following steps as well to effect economy in expenditure.

— Complete embargo on creation of new posts and filling of vacant posts, unless functionally unavoidable. Call it as a mean to “downsize” or “rightsize” the government;

— Productive redeployment of nearly 50,000 employees rendered workless due to the completion of various projects through retraining;

— An attractive voluntary retirement scheme under which all government employees left with five years or less service may seek premature retirement with full pensionary benefits, permissible under the rules, and also continue to draw half of their consolidated pay till they would have retired; and — allow leave of the kind due up to a maximum period of five years for enabling government officials to start their own ventures. In the event of their being successful they may seek retirement with due retirement benefits or opt for voluntary retirement scheme or serve the remaining period of their service.

On taxation and financial proposals, Capt Kanwaljit Singh made the following announcements:

— The additional tax at the rate of 10 per cent on the sales tax under the Punjab General Sales Tax Act, 1948, has been abolished. Instead a new levy of social security cess at the same rate (10 per cent) on all items has been proposed. The proceeds, expected to be around Rs 200 crore, will go to the special security fund to provide pension benefits and other accruals to the widows and destitute women and children, disadvantaged persons and old people.

— Annual lumpsum sales tax is proposed to be hiked on brickkilns: for a category the sales tax now will be Rs 2 lakh against Rs 1.38 lakh now; for ‘B’ category it will be Rs 1.50 lakh against Rs 1.06 lakh now; and for ‘C’ category kilns it will be Rs 1 lakh against Rs 87,000 at present.

— Halwai and bakery goods will be taxed at the rate of 4 per cent and 8 per cent, respectively, of taxable return, rather than on number of hands employed;

— Registration fee for grant of registration certificate has been revised. The fee has been fixed for certificate at Rs 3,000. It is now proposed to levy an annual renewal fee also for registered dealers at the rate of Rs 2,000 per annum.

— There will be electricity duty at the rate of 5 per cent ad valorem on sale of power uniformly applicable to all consumers in lieu of the fixed rate of different categories.

— A cess at the rate of 10 paise per litres of the licensed capacity of milk plants is proposed to promote dairy and live-stock. The purchase tax on milk stands abolished.

— The discretion by the registration officers in the evaluation of property for computation of stamp duty is dispensed with. To overcome discrimination and bring reasonable uniformity in the evaluation of property and checking evasion it has been proposed to suitably amend the relevant provisions of the Indian Stamps Act, 1899. This will mean an additional Rs 50 to Rs 60 crore, raising the revenue on stamp duty etc, to Rs 450 crore, annually.

All the above mentioned proposals are to fetch Rs 100 crore per annum.

The Budget speech of Capt Kanwaljit Singh was not without its political punch. On several occasions he had a dig at the Congress which, he said, had gone to the extent of making an “irresponsible” demand of imposing “financial emergency” in the state. He reminded the Congress members sitting in the House, including Mrs Rajinder Kaur Bhattal, who made one of her rare appearances today, that most of the worries of Punjab today were because of the Congress’s mismanagement.

In fact, Capt Kanwaljit Singh called upon the Opposition benches for arriving a “consensus” on an “economic agenda” and joining the government’s “massive effort” for the welfare of the people. The call cut across party lines and was addressed to the people of Punjab as well.

The speech made the following telling comment: “The root problem lies in the in-built deficiencies and distortions in our politico-economic set-up. These deficiencies and distortions can be rectified only through a comprehensive restructuring of our political, economic and constitutional structure”.

The Finance Minister made a reference to the setting up of the constitutional review panel. He said this only endorsed the long-time SAD stand of working for a “federal” structure in the country. Punjab will present its case of “regional, religious and other minorities before the panel”.

The Budget speech referred to the measures already being implemented to improve fiscal position and reverse the trend. These pertained to “reducing non-productive expenditure, reducing subsidies and raising user charges, road transport, disinvestment in public sector undertakings, smarting up tax administration, etc”.

The additional resource mobilisation will mean a revenue inflow of Rs 50. 61 crore in the current year. But when it comes to sales tax the projection is that ST collection will go up from Rs 1,489.66 crore in 1998-99 to Rs 2,100 crore in the current year, and is being budgeted at Rs 3,000 crore for 2000-01.

The Budget also hinted that the SAD proposed to rekindle the Moga conference spirit. To celebrate its 75 years, the SAD had organised a conference in Moga in 1996. Capt Kanwaljit Singh referred to the resolutions adopted then.

He gave an overview of the economy to show that as a result of certain measures in the past few months a sharp up-turn had been seen. Yet the fact remained that Punjab’s fiscal problem was due to a hefty wage bill, onerous debt servicing burden, stagnant tax and non-tax revenue receipts, heavy subsidisation of social and economic services and loss making PSUs”. These have obtained for the past 15 years and were not a creation of the present government, he added. “So far even the Centre has been unhelpful to all states faced with similar fiscal problems”.

For the proposed new high growth path strategy, Capt Kanwaljit Singh listed four steps : 1) a second push to agriculture, 2) fiscal stabilisation, 3) sharp focus on social and physical infrastructure, and 4) promotion of small and medium enterprises, led by information technology.

The Budget gave enough indication that the government intended to revise, periodically, user charges, fees for water supply, sewerage, transport, higher education, medical and technical education, secondary and tertiary health care etc with the aim of recovering operational and maintenance costs being incurred. This will be done in a phased manner. These user charges will be indexed to the increasing cost of fuel, electricity and salaries and wages.

The public sector undertakings were a pain in the neck. There are 39 of these in which government investment is around Rs 7,335.50 crore (as on March 31, 1999.) Together they add to a meagre return of 0.04 per cent (1998-99). Therefore, Capt Kanwaljit Singh has proposed the closure of such PSUS which are in only name and or are non-functional by providing a suitable safety net to workers employed in them. Second, PSUS performing overlapping functions will be merged, where such a merger leads to improving efficiencies and cutting cost, thereby, bettering their performance and, third in a phased manner government equity in non-strategic PSUs will be reduced to 26 per cent or below. As a first step, government equity in such PSUs will be reduced by 25 per cent. A disinvestment commission will be set up for PSUS and PSUS will be directed to undertake asset construction to be used for retiring government equity loan, he added.

A against the projected return of Rs 3,000 crore from sales tax, the return from excise is Rs 1,385 crore for next year. For enabling easy filing of returns electronic data interface will be introduced and number of information collection centres, computer-based and inter-linked, will be introduced.

Punjab was hopeful of the 11th Finance Commission coming to the rescue of the states keen on management of public debt. In Punjab this public debt is Rs 24,203 crore now. “For amortisation of public debt and for providing comfort to the players in the capital market, it has been decided to constitute a sinking fund for which a provision of Rs 70 crore is being suggested during 2000-01”, he added.

Other key areas of interest to the finance minister pertained to girl child, her education, primary education and health care for all the other services, including rural water supply, sanitation, etc.

Under the welfare schemes, the existing Shagun scheme is being replaced with “Kanya Jagriti Joti” to be implemented by the Social Security and Welfare department, which will benefit a girl child from birth to adulthood. Rather than giving Rs 5,100 ‘shagun’ at the time of marriage, a fixed sum will be deposited at the time of birth. This scheme is for Scheduled Caste girls only.

He concluded by referring to the SAD’s concern for “Panth, Punjab, Punjabis and Punjabiat”. Communal harmony is the corner stone of the new social structure sought to be built. The path is difficult but the objectives are sacred. The slogan for the next financial year was simple: “To Do More With Less”.