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Punjab budget today
Revenue vs sops: It’s a tightrope walk for Dhindsa
Ruchika M Khanna
Tribune News Service

Chandigarh, July 15
Mounting resource crunch, burgeoning expenditure and reliance on populism are set to weigh heavy on Punjab Finance Minister Parminder Singh Dhindsa’s mind as he announces his Budget proposals for 2014-15 on Wednesday. With the Akali-BJP government unwilling to go in for additional revenue generation through imposition of new taxes, Dhindsa, it seems, will have little legroom to give a fillip to the state’s resource mobilisation.

The Budget is expected to have a more realistic growth target for revenue receipts this year. The state has failed to garner the targeted growth in revenues (both from value added tax and stamp duty collections), with the total revenue (from own taxes) standing at Rs 22,383.31 crore, much lower than the Budget estimates of Rs 28,524 crore.

In fact, the total revenue receipts (including Central transfers, state’s own tax and non-tax revenue) is Rs 33,051 crore, as against a target of Rs 42,665.91 crore.

If the last financial year was particularly bad for Punjab — with the state dithering on meeting even its committed liabilities such as payment of salaries and dearness allowance to its employees; and having to resort to mortgaging its properties with banks to get more money — the coming year is expected to be equally hard.

Though Punjab no longer has the liability of paying pending arrears to its employees against new wages, after two years of curtailing its administrative expenses, the state will have to incur more expenses on this front.

The government will also have to clear the retirement benefits of its employees, whose retirement age has been extended by two years to defer making this payment to retirees. An additional Rs 2,000 crore is expected to go under this head.

The salary, wages and pensions alone take away Rs 20,179 crore from the state’s revenue — almost 61 per cent of the state’s revenue receipts. Though the state government has managed to curtail its expenditure in 2013-14 (revenue expenditure is Rs 37,684.52 crore as against a target of Rs 44,412.46 crore), what really ails the state’s financial health is the huge subsidy bill.

Riding on populism, the state, in spite of a huge gap in its income and expenditure, continues to dole out almost Rs 1,260 crore in populist measures such as atta-dal scheme, social security pensions, Shagun scheme and Mai Bhago scheme (for distribution of free bicycles to girls).

Another Rs 5,785 crore goes towards providing free power to poor farmers (though the state has released Rs 2,850 crore till March 2014).

If the money spent on salaries, pensions and sops is taken out from the state’s revenue receipts, the actual money left with the state to improve its road infrastructure, irrigation channels, education, health care et al in 2013-14 is just Rs 8,762 crore.

Punjab has already gone off track from the revised fiscal consolidation roadmap, as specified by the Finance Commission for Punjab. The fiscal deficit is much higher than the specified 3% of the gross state domestic product. By 2014-15, Punjab is expected to be a revenue deficit state.

Fiscal indicators (2013-14)

Total Revenue receipts Rs 33,051 crore

Revenue expenditure Rs 37,684.52 crore

Revenue deficit Rs 4,633 crore

Power subsidy bill Rs 2,850 crore

Atta-dal scheme Rs 370 crore (Rs 20 cr more after revision)

Social security pensions Rs 1,260 crore

What to expect

  • Increase in Budget size by 10%, up from Rs 56,051 crore in 2013-14
  • Increase in annual plan size by 12%, around Rs 18,000 crore in 2014-15
  • Enhancement in old age pension, as promised in the 2012 SAD manifesto
  • Budgetary allocation for tablets to students and unemployability allowance
  • Increase in power subsidy bill to Rs 6,300 crore, taking the total ‘sop’ bill to Rs 8,500 crore.

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