Looking back 2023: Revenue receipts fail to catch up with expenditure

Ruchika M Khanna

Chandigarh, December 26

Punjab’s fiscal health continues to be a major cause for concern for the AAP government with revenue receipts failing to catch up with expenditure.

Though some steps were taken by the state government to improve financial situation, including imposition of new duties on hypothecation, power of attorney, hike in duties on retail fuel, higher GST and excise collections, the humongous subsidy burden and unwillingness to accede to the Centre’s demand for not branding Aam Aadmi Clinics to be constructed from the funds given under the National Health Mission continued to be albatross around the government’s neck.

Frequent run-ins with the Centre over slashing of borrowing limits, withholding of Rural Development Fund, stopping of special assistance grant and imposing cuts on dues hit the state hard.

Initially, the borrowing limit was cut by Rs 18,000 croreon account of the state announcing to shift to Old-Pension Scheme. Though this cut was not imposed, the Centre imposed a second cut in borrowing limit on account of the huge losses suffered by Punjab State Power Corporation Limited.

The Rural Development Fund, amounting to Rs 5,600 crore has not been released and mandi fee has been reduced, National Health Mission Fund to the tune of Rs 700 crore and special assistance grant of Rs 2,600 crore has been held back.

It’s also a fact that the state’s power subsidy burden (Rs 21,163 crore for the ongoing fiscal), high committed liabilities – salaries and pensions of employees (Rs 52,986 crore) and debt servicing (Rs 23,000 crore are eating a major part of the state’s revenue receipts.

The government’s inability to get out of the trap of consolidating its vote base through these sops has only made the situation worse. The state’s debt burden is expected to reach 3.47 lakh crore at the end of this fiscal.

Finance Minister Harpal Cheema said the government was still grappling with their “inheritance of loss”. “We received an economy that was in shambles from the previous government. But look at how our government has been spending money for the public welfare. We are putting money back in pockets of people and giving them the best of healthcare and education facilities. The GST and excise collections have improved drastically,” he said.

“We have put in Rs 8,000 crore in the sinking fund of the state,” he said. The minister said it was their government which also succeeded in getting the pending GST dues released worth Rs 4,000 crore from the Centre.

Highs

• The state managed to increase its GST collection by 17.45 per cent, stamp duty by 12.53 per cent and excise collection by 10.2 per cent between April and October last year
• The government managed to set aside a sinking fund of Rs 8,000 crore to be used for repaying debts

Lows

• The huge power subsidy, which has skyrocketed because of 600 units (two months) of free power to consumers is affecting the fiscal health of the state
• The state’s debt is heading towards being unsustainable as it is expected to reach Rs 3.47 lakh crore by March next year

Looking ahead

• The state government will have to increase its revenue receipts, cut down on subsidy and lower its other committed liabilities in the coming year
• Considering the keen interest taken by AAP’s top brass in the fiscal health of the state, it seems that some concrete steps on lowering the committed expenditure will be taken

Projections

Rs 89,352 crore Revenue Receipts

Rs 1,22,758 crore Revenue Expenditure

Rs 33,406 crore Revenue Deficit