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No new taxes in Punjab Budget
Ruchika M Khanna
Tribune News Service

Chandigarh, July 16
With focus on fiscal consolidation, Punjab Finance Minister Parminder Singh Dhindsa today presented his Budget proposals of Rs 58,593 crore for the year 2014-15. No new taxes have been imposed, neither have any new welfare schemes been announced in the Budget proposals for the current fiscal presented in the Punjab Vidhan Sabha today.

Presenting his third Budget in the Punjab Assembly, Dhindsa said the state had achieved a growth rate of 5.25 per cent in 2013-14. He admitted that the state was under fiscal stress. Outlining the government efforts for combating the social and financial problems on a war footing, Dhindsa said in the past 10 years, the state had received little help from the UPA government.

Now with the NDA government in power at the Centre, Punjab was expecting aid to put its economy back on the track. “We have made additional Budget allocations for skill development (Rs 550 crore) and for drug de-addiction centres (Rs 100 crore),” he said, adding that the problem of unemployment and drug menace needed to be tackled on a priority basis.

However, the Budget proposals, which give details of the state of finances for the past year (2013-14) and give projections for the current fiscal (2014-15), have confirmed the worst fears regarding the state’s fiscal health. There is no end to the gap between the revenue receipts and expenditure with expenditure remaining high. The state’s public debt will increase from Rs 1.01 lakh crore in 2013-14 to Rs 1.13 lakh crore by the end of this fiscal. The debt servicing will take away Rs 11,496.25 crore from the total revenue receipts of Rs 44,893.68 crore. If the debt servicing to revenue receipts ratio exceeds 20 per cent, the debt becomes unsustainable, and in Punjab, this ratio is over 25 per cent.

Simply put, Punjab will earn Rs 44,893.68 crore and spend much more - Rs 49,146.31 crore. This means that the state will continue to be a revenue deficit state, having a deficit of Rs 4,252.63 crore.

Of the total revenue receipts of Rs 44,893.68 crore, Rs 22,727.37 crore will be the outgo as salaries and wages and payment of pension and retirement benefits.

Power subsidy Bill will take away another ~5,300 crore, ~400 crore will go towards atta dal scheme, ~685 crore towards social security pensions, ~90 crore under shagun scheme and around ~50 crore under the Mai Bhago scheme for free cycle distribution.

Together, salary, pension and these sops will take away Rs 29,353.37 crore from the total state’s income, leaving just Rs 15,540.31 crore for other development works, which include agriculture and allied services, education and health amongst others.

The effort of the Akali-BJP government to spare people of any additional tax burden once again this year means that the state will go off track from the fiscal consolidation roadmap laid down by the 13th Finance Commission. The revenue deficit of the state should have been zero by the end of this year, but it is now expected to be Rs 4,252.63 crore ( which is 1.66 per cent of the state gross domestic product).

The Finance Commission has outlined in its report that any departure from the fiscal consolidation targets becomes a conditionality for release of all state specific grants. Dhindsa told The Tribune that he was hopeful that this clause would change once the report of the 14th Finance Commission is presented later this year. "We need resources to carry on with our development work,” he said.

Fiscal indicators Budget size: Rs 58,593 cr (in addition provision of Rs 15,000 cr made for ways and means transaction) Revenue receipts: Rs 44,894 cr Revenue expenditure: Rs 49,146 cr Revenue deficit: Rs 4,252 cr States own tax revenue: Rs 28,480 cr States own non-tax revenue: Rs 2,783 cr Share of Central taxes: Rs 5,400.32 cr Grants in aid from Centre: Rs 8,230.36 cr Outstanding public debt: Rs 1.13 lakh cr Fiscal deficit: Rs 10,373 cr