Chandigarh, September 19
While Punjab expects to net Rs 800 crore in the next three months through tax collections, the amount is likely to go towards meeting the liability of arrears amounting to Rs 1,000 crore under the Fifth Pay Commission.

The state looks to generate the money through increase in VAT collections (Rs 250 crore), regularisation of illegal colonies (Rs 200 crore) and purchase tax on paddy (Rs 350 crore).

The state government has already announced its decision to pay 30 per cent of the arrears to its 3.15 lakh employees by December. These arrears (salaries and pensions) amounting to Rs 1,000 crore were to be paid to the employees in May, but it deferred the payment because of lower revenue collections in the first quarter.

The state government will also have to pay the dearness allowance (DA), announced in January and again this month, to its employees. The DA (one announced in January) works out to Rs 100 crore per month alone. Sources in the government said the government was negotiating with the employees to accept their arrears and forego their DA for this year.

But the employees have rejected the proposal saying bureaucrats have already been given their DA in May, along with the arrears. If the government releases the DA to its employees, it will have to incur additional expenditure of Rs 1,200 crore, putting the total till December at Rs 2,200 crore.

The state once again exhausted its ways and means advances (WMAs) limit of Rs 360 crore today and is now headed for an overdraft.