Pre-poll sops take a toll on Punjab’s coffers

Ruchika M Khanna

Chandigarh, March 2

Punjab’s Budget projections for the ongoing fiscal have gone completely haywire, thanks to the distribution of pre-poll sops. In 10 months, the state earned just 60% of the revenue receipts, while the deficit has already exceeded the estimates for the entire fiscal.

What is worse is that there are little chances of any improvement in revenue in the remaining two months of this fiscal (February and March). This is because the state has been in an election mode and there has been no “political guidance” on the revenue collection, as the government’s focus remained only on ensuring that benefits were passed on to voters before the polling day (February 20).

A look at the fiscal indicators till January (10 months of 2021-22) reveals that the state’s revenue receipts were just Rs 58,021.17 crore, which is just 60.9% of the Budget estimates. Though the state’s own tax revenue collection is good at over 78%, its non-tax revenue collection is rather dismal at 33%, as is the receipt of grant-in-aid from the Centre at 43.3%. In the corresponding period last year, the grant-in-aid received were much higher, and were 78% of the target in the Budget.

The low inflow of revenue has affected the deficit figures, which have crossed the estimate of Rs 8,622.31 crore in the Budget. Till January, the revenue deficit was Rs 9,308.58 crore — almost Rs 686 crore more than what was targeted for the entire financial year. Even the primary deficit (difference between the current year’s fiscal deficit and interest payments on earlier borrowings) has overshot the target, with the deficit being Rs 5,601.43 crore against a target of Rs 3,924.15 crore.

Even the borrowings till January this year have been much higher at Rs 17,108.82 crore as against Rs 9,928.34 crore in the corresponding period of 2020-21. The state borrowed heavily in December — Rs 3,868.96 crore, in the run-up to the elections. A sum of Rs 11,507. 39 crore has been spent by the state only on interest payment.

As a result, whichever party gets the reins of Punjab on March 10, once the poll results are declared, will be inheriting a cash-strapped and highly indebted state.