Punjab budget: Five key takeaways
Chandigarh : Finance Minister Harpal Singh Cheema, like some of his predecessors, started his stint by talking about the ‘empty coffers’ left by the previous government and even brought out a ‘white paper’ on the debt-laden state’s finances
Chandigarh : Finance Minister Harpal Singh Cheema, like some of his predecessors, started his stint by talking about the ‘empty coffers’ left by the previous government and even brought out a ‘white paper’ on the debt-laden state’s finances. He promised to put things back on track, setting ‘ambitious’ targets for revenue augmentation to find resources for the party’s cash-guzzling poll promises, particularly 300 units of free power to all households. HT cuts through the jargon and numbers given in the budget document to look some positives and negatives.
Revenue deficit
The revenue deficit has spiraled in the current fiscal. In budget estimates 2022-23, revenue deficit – which shows excess of revenue expenditure over revenue receipts of the government in a financial year, of ₹12,553.8 crore, but has nearly doubled to ₹23,890.77 crore as per the revised estimates for the year. A finance department official said the government had to clear the dues left pending by the previous government. In 2023-24, Cheema has pegged it at ₹24,588 crore. As for the state’s fiscal deficit as a share of GSDP, it has increased from a budget estimate of 3.78% in 2022-23 to revised estimate 5.21%. It is expected to come down to 4.98% in 2023-24, which is higher than what almost all state governments have budget for.
Revenue receipts
Revenue augmentation was among the three focus areas of the AAP government in its first year. The state government set ambitious targets as compared to previous years, but has fallen short marginally. Overall, it has managed to do fairly well in own tax revenue (OTR) and own non-tax revenue (ONTR) collections. As per the revised estimates 2022-23, state excise collection is up by 45%, goods and services tax by 23%, stamps and registration by 19% and non-tax revenue by 26%. In 2023-24, it is targeted 17.5% in OTR and 29% in ONTR over the revised estimates for this year.
Debt mound
Before it stormed to power, AAP leaders never missed any opportunity to target the then Congress government on the issue of debt burden. Punjab was among the most indebted state in the country with a debt-gross state domestic product (GSDP) ratio of 44.74% at the end of the previous fiscal. The state government borrowed than its initial budget estimates. Against the budget estimate of ₹3.05 lakh crore, it is going stand at ₹3.12 lakh crore as on March 31, 2023, as per the revised estimates. The debt is projected to touch ₹3.47 lakh crore on March 31, 2024 – 46.81% of the gross state domestic product.
Capital expenditure
With bulk of borrowings going into debt servicing, it is another area of concern for the state government as it has fallen short of its target for financial year 2022-23. In the budget estimates, it proposed an expenditure of ₹10,981 crore on the creation of income-generating assets. The number has been revised to ₹8,513 crore which was only marginally above the capital expenditure of ₹8,010 crore incurred by the previous government in 2021-22. The finance minister has now projected capital expenditure of ₹10,354 crore in the coming year.
Committed liabilities
Another major worry for the state government is the rising bill on account of payment of salaries, interest payments, pensions and retirement benefits. In the current fiscal, the state spent ₹70,327 crore – or say approximately 75% of its total revenue receipts – on clearing its committed liabilities. With the state government in the process of making more recruitment and regularising the services of ad hoc and contractual staff, it is estimated to increase to ₹74,620 crore and may be even higher.
