Swelling debt & low revenue, state economy in dire straits

With the state’s fiscal health continuing to be on the wane, Chief Adviser (Fiscal Affairs) Arbind Modi is looking at ways to increase revenue receipts by plugging loopholes in tax collection and the social security cover given to vulnerable sections.

Modi, who chaired a meeting with senior functionaries and officials of the state Finance Department on Wednesday, reportedly told them that he was working to enhance revenue by plugging gaps in tax collection, rather than looking at cutting subsidies. Members of the Punjab Development Council and senior officials of the Excise Department were also present at the meeting.

The AAP government in the state has been under (political) fire for giving 300 units of free power to domestic consumers, but it has stuck to its guns saying being a welfare state, it is its way of helping out people reeling under high inflation.

Discussions were also held on trades/businesses involving illegal cash transactions. The officials reportedly also pointed out that there might be many cash-run businesses, but not all were illegal. The state’s burgeoning debt (Rs 21,119.29 crore borrowed between April and September) was also discussed at the meeting.

During a previous meeting, Modi had expressed apprehension about the total number of pensioners and sought a review of such cases.

At the time when discussions on revving up the state’s sagging economy are on, fiscal indicators for the first six months reveal a grim picture. With half the fiscal over, the state government has managed to earn just 40.13 per cent of the targeted revenue for 2024-25. The tax collection is 43.26 per cent of the target of Rs 80,941.48 crore, but the non-tax revenue collection is rather poor.

The non-tax revenue collection in six months is just 24.37 per cent (Rs 2,741.04 crore) of the targeted Rs 11,246.33 crore. The income from land revenue is just Rs 53 crore. It is this non-tax revenue that Modi has been asking the Finance Department to fix, besides increased CAPEX spending (spending on creation of capital assets). In first six months, the state has made a capital expenditure of Rs 2,754.19 crore.

Sources say though the expenditure of Rs 60,011.77 crore made between April and September this year is also high, the state government is already doing the tightrope walk on spending money.