Punjab brings new tax for salaried class, budget focuses on fiscal consolidation

Ruchika M Khanna

Tribune News Service

Chandigarh, March 24

The Congress-led Punjab government on Saturday proposed a development tax of Rs 200 per month on income tax payees as the budget for 2018-19 focused on fiscal consolidation, with the state finance minister exuding hope of putting economy back on rails over the next two years.

The budget's key focus areas remained agriculture and farmer welfare, industry, health, employees and students.

While presenting the second budget of the Congress government, Finance Minister Manpreet Singh Badal said, “We have tried to mobilise resources and cut down on expenditure.”

The total budget size was kept at Rs 1,29,698 crore, though the effective budget size is Rs 1,02,198 crore.

Manpreet Badal proposed raising Rs 1,500 crore through additional resource mobilisation measures. He further informed the Assembly that the government has decided to bring in a legislation for imposing a "nominal development tax" at the rate of Rs 200 per month "only on the Income Tax payees who are engaged in professions, trades, callings and employments".

The new tax will be called 'Punjab Development Tax', under which government is hoping to garner Rs 150 crore annually.

As the state goes for resource mobilisation, Manpreet said the move will help the state access cheaper loans from institutions like Asian Development Bank.

“Many of the progressive states like Maharashtra, Gujarat, Karnataka, Andhra Pradesh and Tamil Nadu have been collecting such tax for development for a long time.

"The state also intends to bring in a new Social Security legislation to create a dedicated fund to meet its commitment towards the weaker sections of the society," he said in his budget speech.

In the education sector, the state will provide all requisite text-books free of cost to students of Classes I to 12 studying in government schools during 2018-19, for which Rs 49 crore has been provided for.

The government will provide free sanitary napkins to all girl students from Classes 6-12 in all government schools with an objective to promote menstrual hygiene and reduce dropout of girl students.

All municipal towns/areas would be made Open Defecation Free by June 30, 2018, under the Swachh Bharat Mission.

Manpreet informed that the total outstanding debt of the state is Rs 1,95,978 crore, which is 41.04 per cent of GSDP for 2017-18. The outstanding debt liability is likely to be Rs 2,11,523 crore in 2018-19, 40.82 per cent of GSDP.

The debt servicing (principal plus interest) for 2018-19 is a whopping Rs 24,870 crore as against the allowed net borrowing limit of Rs 15,545 crore approved by Government of India for financial year 2018-19.

Manpreet said the only way left for government is to mobilise more revenue while at the same time cutting down on our non-committed expenditure.

Manpreet Badal's budget speech was disrupted for a while by slogan-shouting opposition MLAs of Akali Dal and Aam Aadmi Party, who protested near the Well of the House and later walked out alleging that the Congress government backed out from its promise of complete debt waiver made to farmers.

“..We have been able to contain the fiscal deficit to 4.36 per cent during 17-18 as compared to 12.18 per cent for 16-17," he said, adding this has been targeted to be 3.81 per cent in 2018-19 in the given circumstances of "huge committed liabilities".

The state's revenue expenditure rose from Rs 55,296 crore in 2016-17 to Rs 71,183 crore in 2017-18 and during the same period, expenditure on salaries, wages and grand-in-aid has risen from Rs 21,729 crore to Rs 24,938 crore, and on pensions from Rs 8,773 crore to Rs 9,469 crore, he said.

The expenditure on interest payments rose from Rs 11,642 crore to Rs 15,175 crore. The total revenue expenditure on these committed liabilities is itself 87 per cent of total revenue receipts of state during 2017-18.

"Despite my best efforts, I have only been able to peg the revenue deficit at 2.42 per cent of GSDP in 2018-19. However, we remain committed to reducing this deficit consistently and getting the state into an era of revenue surplus," he said.

During 2017-18, the GSDP of the state has increased from Rs 4,33,660 crore in 2016-17 to Rs 4,77,482 crore, and it is projected to increase to Rs 5,18,165 crore in 2018-19.

The per capita income of the state has also increased from Rs 1,31,112 in 2016-17 to Rs 1,42,958 in 2017-18 and is 28 per cent higher than national average of Rs 1,11,782, he said.

Touching on farmers' welfare, Manpreet said that the total outlay for the year 2018-19 has been increased from Rs 10,581 crore (17-18) to Rs 14,734 crore.

On the Congress government's key poll promise of debt waiver, an amount of Rs 4,250 crore has been proposed for implementation of this scheme during 2018-19. During 2017-18, Rs 370 crore had been disbursed to 71,166 marginal farmers.

"The focus of this government is the farmer of the state and we have decided that our policies on agriculture and rural economy shall be centred only on the welfare of farmer," he said.

Free power is being provided by the state government to farmers and subsidised power to SC, BC and Non SC-BPL category and a provision of Rs 8,950 crore is being made in the budget 2018-19.  

Highlights

*Rs 124 crore to strengthen law and order machinery

*The budget has revenue deficit of Rs 12,539 crore

*AAP MLAs come back to the House

*Rs 1,235 crore set aside for welfare schemes

*Government is setting up Mahila Shakti Kendras, to provide interface for rural women to approach the government for availing their entitlements

*740 villages to be covered under solid waste management scheme in 2018-19

*According to the demand of Panjab University, the state government to give Rs 42.62 crore in next fiscal, up from Rs 33 crore for this year. Budgetary allocations for all universities increased by 6 per cent over previous year’s allocations

*Rs 25 crore for promotion of Punjabi language

*Free wi-fi in all 48 government colleges by July 2018

*A skill university at Chamkaur Sahib to be set up and a new scheme for skill training--Punjab Naujawan Hunar Vikas Yojana--announced

*Health outlay for 2018-19--Rs 4,015 crore, an increase of 13 per cent over this year. New hospitals to be set up at Doraha in Ludhiana and Ghanour in Patiala

*Rs 20 crore set aside for setting up trauma centres on important highways

*A state cancer institute at Amritsar and tertiary cancer care centre at Fazilka at a cost of Rs 84 crore

*Two new medical colleges to be set up

*One park each to be developed in 16 towns having population of over one lakh

*Rs 8,950 crore set aside for power subsidy to farmers, SC, BC and BPL families

*FM says they are examining 100 MW solar power plant at ash dykes area of the now closed-down Guru Nanak Dev Thermal plant, Bathinda

*Rs 100 crore for new judicial complexes at Mohali, Ferozepur, Patti, Bathinda, Ludhiana, Nawanshahr, Baba Bakala and Mukerian

*16 new bus stands to be set up in PPP mode at Amritsar, Barnala, Batala, Bathinda and other towns

*Several schemes for relining of canals. Budgetary allocation of Rs 167 crore made for this

*Special lift irrigation system at Rs 46 crore to boost agriculture at Anandpur Sahib

*A development tax at Rs 200 per month imposed on all income tax payees of the state

*A social security legislation to be brought in to create a dedicated fund to pay social security pensions

*Rationalisation of non tax revenue promised by the FM, though he admits that there will be an unfunded resource gap of Rs 4,175 crore

*Badal says this will be met through efficiency in tax compliance and administration and efficient delivery of public services

*Free textbooks will be provided to all students from Class 1 to 12, in government schools. A sum of Rs 49 crore has been provisioned for this

*Smart schools in each educational block. Rs 50 crore to be provided for this

*1,597 additional classrooms to be constructed by spending Rs 120 crore

*Punjab to develop tourism circuits--spiritual circuit, maharaja circuit and Mughal circuit at a cost of Rs 10 crore

*40 per cent increase in allocation for agriculture sector. Rs 14,734 crore allocated for this sector

*Rs 4,250 crore allocated for the Crop Loan Waiver Scheme

*Akali Dal and BJP MLAs protest against insufficient allocation for Crop Loan Waiver

*They raise slogans against the government. Led by Bikram Singh Majithia, all MLAs rush into the well of the House to protest

*Manpreet continues with his proposals, amidst slogan-shouting by Akali-BJP MLAs

*He announces special emphasis on horticulture. Citrus cultivation to be diversified by introducing 12 new sweet orange and five mandarin varieties

*Small cold stores (15 mt capacity) to be set up at Kapurthala and at Hoshiarpur (30 MT capacity). Rs 180 crore allocated for sugarcane growers to buy the cane for 2018-19 crushing season

*AAP MLAs too storm into the Well of the House and protest

*Akali-BJP MLAs walk out of the House over the insufficient Crop Loan Waiver allocations

*Centre for Excellence in Shooting Range at Muktsar and Mohali to be set up

*For industry, modernisation of infrastructure in existing focal points at Rs 10 crore. Punjab to develop Chandigarh-Ludhiana-Amritsar and Chandigarh-Hoshiarpur-Gurdaspur urban industrial corridors

*Rs 100 crore for the 550th birth anniversary celebration of Guru Nanak

*AAP MLAs stage a walkout

*Manpreet continues to read his Budget proposals with all opposition members having walked out

— With PTI inputs