New Delhi: The outstanding debt in Punjab is expected to rise to Rs 2.85 lakh crore in 2022-23, an increase of 8.4 per cent from the previous year. This means that on an average, each inhabitant of Punjab will likely witness a jump in their per capita debt from Rs 94,000 to Rs 1.01 lakh — an increase of more than Rs 7,700 per person.
That’s what the maiden Budget presented by Punjab’s Aam Aadmi Party (AAP) government Monday shows.
While Finance Minister Harpal Singh Cheema’s Budget speech emphasised cutting burgeoning debt, augmenting the state’s own tax revenues, and fulfilling poll promises, he did not provide a definite roadmap for consolidation of the fiscal deficit.
While the overall debt is expected to fall as a percentage of the gross state domestic product (GSDP) to 45.23 per cent, the government has pegged a higher fiscal deficit of 3.78 per cent of the GSDP in 2022-23, compared to 3.54 per cent last year.
“The focus areas for the first year will be to restore the deteriorating fiscal health and moderate the augmenting debt by increasing our own revenues, to deliver on the promise of ‘good governance’ and to concentrate on the two foundations of any society— health and education,” the finance minister said in his budget speech.
The government reiterated its commitment to providing 300 units of free power monthly to all from 1 July, adding to the total power subsidy bill of Rs 15,845 crore — an increase of 18 per cent from the previous year and around 64 per cent more than the subsidy provided in 2020-21.
However, missing in the budget speech was any reference to fulfilling the promise of providing a Rs 1,000 allowance for each woman over 18 years of age.
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Total spending up by 14 per cent from FY22
The government aims to spend a total of Rs 1,55,860 crore in 2022-23, an increase of 14.2 per cent from the previous year. This spending, mostly dedicated to health, education, and agriculture, accounts for 25 per cent of the state’s GDP.
However, 30 per cent of the total spending — Rs 46,317 crore — will go towards the salaries and pensions of state government employees, who saw a hike in their salaries last year with the implementation of Punjab’s 6th Pay Commission recommendations.
The government is expected to spend about 15 per cent of its Budget, or Rs 23,498 crore, on building infrastructure and maintaining existing roads, bridges, and buildings, including government schools.
The health budget is likely to see an increase of 23.8 per cent from the previous fiscal to Rs 4,731 crore, focusing on new initiatives like setting up of mohalla or pind clinics in order to decentralise public health services.
“Seventy-five of these mohalla clinics will be operationalised by 15 August, 2022,” Cheema said.
The government said it would spend Rs 10,981 crore on capital creation in 2022-23, an increase of 9 per cent over the previous year. The allocation for capital spending is, however, just 7 per cent of the total spending for 2022-23, whereas the Centre spends roughly 19 per cent of its total target on capital creation.
That is mostly because in the past five years ending March 2022, the state’s own tax revenue has decreased from 71.82 per cent of the total revenues to 47.79 per cent, indicating a decline in Punjab’s ability to raise resources internally and a dependence on transfers from the Centre.
In the same period, the total outstanding debt of Punjab has grown by 44.23 per cent to Rs 2.63 lakh crore at the end of 2021-22. The total debt in the current year is expected to grow to Rs 2.85 lakh crore or 45.23 per cent of the GSDP.
In the current year, the state expects its GSDP to grow by 9.8 per cent to Rs 6.3 lakh crore.
Where will funds for increased spending come from?
According to Budget documents, of the total spending in Punjab, at least 20 per cent will be funded through loans from banks and other financial institutions. About 30 per cent will be funded through the state’s own tax revenues, and the rest will come through grants and other transfers from the Centre.
While the state’s own tax revenue is likely to increase by 20 per cent in the current year to Rs 45,588 crore, the total revenues are likely to see an increase of 18 per cent from the previous year.
Without announcing any new tax, the finance minister said that the government would have a new “game-changer” excise policy that would break the monopolies that have developed in this sector over time.
“We are hoping for enhancement in our excise revenue to Rs 9,648 crore, which would be a whopping increase of 56 per cent over FY 2021-22,” Cheema said.
Earlier this month, the government rolled out the excise policy for 2022-23, making liquor cheaper by 35-60 per cent. Under the policy, there will no longer be a “quota” for selling beer and India Made Foreign Liquor (IMFL). A quota here refers to the fixed amount of liquor that suppliers can procure from the open market during a specified period.
The finance minister added that buoyancy in Goods and Services Tax (GST) collections would get the state revenues of around Rs 20,550 crore, an increase by about 27 per cent from the previous year.
Cheema also announced the creation of a tax intelligence unit that is aimed at helping the finance department improve tax compliances under GST.
The government expects a revenue deficit of 1.99 per cent in 2022-23, compared to 3.66 per cent in the previous year and 3.27 per cent in 2020-21. The comparative figures may vary at the end of the year as there is usually a large difference between Punjab’s revenue projections and the actual amount collected.
(Edited by Asavari Singh)
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