One Year of AAP Govt: Revenue receipts go up, rising debt a cause for concern in Punjab

Ruchika M. Khanna

Chandigarh, March 15

Punjab’s precarious fiscal health can be gauged from the fact that the state will spend more than it borrows on just repayment of principal and interest on outstanding debt. This is because the state’s debt will touch Rs 3,12,758.24 crore by the end of this month and increase to Rs 3,47,542.39 crore by the end of 2023-24.

Plugging loopholes

I realise that the revenue receipts have to go up and we are working on increasing our own tax revenue by plugging all loopholes to prevent tax evasion. This year, a number of steps to boost non-tax revenue will also be taken. We have increased our revenue in the first year by 20 per cent and we are sure of a sustained growth in coming years. Harpal Cheema, Finance Minister

Little wonder then that the Aam Aadmi Party government has come under the Opposition fire ever since the Budget proposals for 2023-24 were announced last week.

The Opposition leaders, economists and social scientists have all been expressing reservations over the government’s untargeted spending on freebies to the common man without giving an outline on mopping up of revenues. Even for this fiscal – which is the AAP’s first year in office — the revenue receipts, though up by Rs 15,394.90 crore or nearly 20 per cent (as per revised Budget estimates), fell short of the target by nearly Rs 1,815 crore.

Even during the AAP rule, Punjab’s debt to the Gross State Domestic Product (GSDP) ratio has continued to rise. From 45. 81 per cent, it is expected to go up to 46.81 per cent in the coming year. This puts Punjab in the list of the most debt-stressed states. A recent report by the Reserve Bank of India, which had put Punjab at the bottom of the list for its debt to the GSDP ratio, had even warned that the state would find it difficult to source loans, recommending that the state would need “a special helping hand”.

Though the present situation is not the doing of this government, which received an “inheritance of loss” from its predecessors, the government has come under fire from experts because “no substantial efforts to fulfil its pre-poll promises of getting Punjab economy back on the tracks” have been taken.

Ranjit Singh Ghuman, economist, says, “We expect a commitment from the government to mobilise additional resources and present to the people a roadmap to bring the outstanding debt within reasonable limits so that adequate outlay can be made for building capital assets and social development.” He warns that the government should not fall in the trap of unsubstantiated populism.

Experts have also warned about how the power subsidy to 90 per cent of domestic consumers (a whopping Rs 20,200 crore for the ongoing fiscal) is uncalled for and is draining the resources when only a small section of the population actually needs this.

Economist Kesar Singh Bhangu said, “Considering the limited fiscal space, at least they are taking baby steps in returning loans and trying to go for social development.”

HIGHS

• Revenue receipts up by 20 per cent
• States excise duty collection up by 43-45 per cent
• Plans afoot to swap high-cost long-term debts with low-cost market borrowings
• Tax intelligence unit being strengthened to plug evasion in state taxes, especially GST
• New mining policy expected to rake in moolah

LOWS

• Free 300 units for domestic consumers to retain voters is bleeding the state exchequer
• In the first year, the government borrowed Rs 30,986 crore and will borrow another Rs 34,784 crore in 2023-24, taking the debt burden to Rs 3.47 crore by March 2024
• Debt to GSDP ratio is rising; highest in the country
• Other than mid-year levy imposed on retail fuel, little is done to increase own tax collection