Punjab Budget

Just three months after storming to power in Punjab, the Aam Aadmi Party (AAP) finds itself on a sticky wicket, particularly over the deteriorating law and order situation and the accusation that the state government is being remote-controlled by the party’s Delhi-based high command. The rumblings of discontent are growing, as witnessed by the party’s stunning defeat in the Sangrur Lok Sabha byelection. Thus, it’s not surprising that the first Budget presented by the AAP government focuses more on fulfilling pre-poll promises than on offering a viable action plan for pulling the state out of the fiscal morass into which it has been sinking deeper with each passing year.

Punjab Finance Minister Harpal Singh Cheema has claimed that most of the major ‘guarantees’ have been taken care of — 300 units of free electricity to domestic consumers every month, considerably enhanced allocation for the education and healthcare sectors and a hike in compensation to families of martyred soldiers. However, uncertainty prevails over a freebie that had proved to be a huge vote catcher — Rs 1,000 per month to every woman (aged 18 years or above) in the state. Desisting from levying any new tax, the government has pinned hopes on an ‘expected jump’ in revenue receipts and GST collections. With the GST compensation regime nearing its scheduled end, the debt-burdened state’s coffers are estimated to be left poorer by around Rs 15,000 crore during the ongoing financial year, even as the power subsidy will continue to drain the exchequer. The state might get a lifeline if the Centre accepts its demand to extend the GST relief scheme, but there seems to be no concrete Plan B in case that doesn’t happen.

Punjab has been living beyond its means for long and successive governments have failed to strictly enforce fiscal discipline as well as tax compliance. The AAP dispensation has committed itself to reducing wasteful expenditure and curbing tax evasion, but a prolonged spell of populism could undermine these efforts and worsen the state’s economic woes.

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