Fiscal woes persist as govt falls well short of revenue target

Ruchika M Khanna

Tribune News Service

Chandigarh, November 18

The cash-strapped state government has fallen well short of its revenue targets for the first six months of this financial year. High liabilities inherited from the previous government, coupled with a populist approach, have ruled out improvement in the state’s fiscal health.

Chief Minister Capt Amarinder Singh told The Tribune earlier this week that he could seek a re-run for office, “for Punjab’s sake”. His political opponents as well as economists, however, feel that he will first have to produce results and put the state’s economy back on track.

His detractors have one advice for him: shun populism and stop pledging fewer sources of revenue generation to fund populist schemes. The state managed to collect just 31.53 per cent of its targeted total receipts (or 35 per cent of its targeted revenue receipts for 2017-18) in the first six months of the fiscal. And the Goods and Services Tax (GST) collections have been far below the state’s expectations of 14 per cent rise in revenue.

Not only is the state forced to borrow more to provide farmers with debt relief, but the state is also re-adjusting its market borrowings to meet its committed liabilities of paying salaries.

Thus, the state’s debt burden is expected to surpass its estimate of Rs 1.95 lakh crore by March 2018. The grant-in-aid and the Centre’s contribution to several schemes have also dwindled this financial year.

Financial indicators for the first six months (April to September) show that only 23.1 per cent of the total Central devolution estimated for this year (Rs 1,542.35 crore) has been received against a target of Rs 6,678 crore. Even the Integrated GST will not come to Punjab’s treasury each month, but once in a trimester. The only resource available to the state is excise collection, VAT on fuel and the state GST, which can barely meet the committed liabilities.

The government’s reluctance to mobilise resources by imposing additional taxes, too, is adding to its woes. Though Capt Amarinder had announced in July that new taxes would be imposed, he was later forced to retract, keeping in view the impending civic body elections.

“A government formed with a thumping majority should take hard decisions for resource mobilisation in the first three years of its term. Not only has the Congress government sacrificed the additional revenue that could have been earned through an increase in market fee and rural development fund (Rs 900 crore per annum), but also stamp duty has been reduced to woo urban masses ahead of municipal elections,” says former Finance Minister Parminder Singh Dhindsa.

When asked about the way ahead, he said that though the scope for imposing new taxes was limited post-GST, the government would have to tighten its purse strings and impose some taxes.

Will relook at excise policy: FM

The government will have a relook at the excise policy, which will help us raise a few hundred crores more. In the past six months, we have done drastic cost-cutting, helping us to keep expenditure low. If we earned less, we have also spent less in the first six months. I have a roadmap to make Punjab revenue-surplus in four years. — Manpreet Singh Badal, Finance Minister