No new tax in Punjab Budget; big push for health, drug menace

No new taxes were imposed as Punjab Finance Minister Harpal Singh Cheema on Wednesday presented a Rs 2.36 lakh crore Budget for 2025-26 that prioritised combating the drug menace, improving policing and strengthening the health and education infrastructure.

Notably absent was the fulfilment of AAP’s key electoral promise of Rs 1,000 monthly allowance for women, although the government maintained its free bus travel scheme for women with an allocation of Rs 450 crore, the same as the current fiscal despite actual costs exceeding Rs 750 crore.

Though Cheema emphasised fiscal consolidation, claiming that both revenue deficit and fiscal deficit “are well under control”, the Budget documents show that the state’s total debt is projected to swell to Rs 4.17 lakh crore by March next year. The total revenue deficit in 2025-26 will be Rs 23,957.28 crore or 2.51 per cent of the Gross State Domestic Product (GSDP), which incidentally is shown to have increased by 9 per cent. Cheema called the debt a “burden inherited from the previous Congress and Akali-BJP governments, which he is trying to repay”.

Since no new taxes have been imposed, the AAP government is relying on buoyancy in tax collection, especially in GST, VAT and excise duties, to earn Rs 1,11,740.32 crore in 2025-26, an increase of Rs 8,020 crore.

A staggering Rs 1.02 lakh crore is committed to salaries (Rs 36,427 crore), pensions (Rs 20,750 crore), power subsidies (Rs 20,500 crore) and loan interest payments (Rs 24,995 crore), leaving only Rs 9,067 crore for development initiatives. The government plans additional borrowing of Rs 49,900 crore to meet its obligations.

Terming the Budget a road map for “Badalda Punjab” Cheema prioritised the anti-drug campaign featuring Punjab’s first comprehensive drug census to map addiction patterns across all households. He said, “The government will deploy 5,000 Home Guards as a second-line defence against smuggling and install anti-drone systems along sensitive borders.”

The government announced “Khedda Punjab, Badalda Punjab” initiative that will ensure that every village has a playground and gym. Locally popular sports will be promoted. “On a pilot basis, we have built 87 volleyball courts in Tarn Taran as this sport is popular there. We will also set up 3,000 indoor gyms,” Cheema said, announcing the highest-ever allocation of Rs 979 crore for sports.

The other major focus of the Budget is on the Scheduled Caste community, who comprises over 32 per cent of the voters in Punjab. While 34 per cent of the state’s total development Budget – Rs 13,987 crore -- has been allocated under the SC sub-plan, a debt waiver scheme for 4,640 persons, who had availed loans from the Punjab Scheduled Castes Land Development and Finance Corporation till March 2020, has also been announced.

Education and Healthcare have both got special attention in the Budget. The free health insurance scheme has been extended to 65 lakh families from the earlier 45 lakh families. The insurance cover has been increased from Rs 5 lakh to Rs 10 lakh. Funds have also been allocated for a new medical college at Nawanshahr.

The agriculture sector received Rs 14,524 crore, including Rs 500 crore for crop diversification and promotion of maize cultivation across 21,000 hectares, alongside Rs 9,992 crore for farm power subsidies. Natural farming practices will be promoted for horticulture crops in Amritsar, Nawanshahr, Ropar, Hoshiarpur and Mohali.

Industrial incentives worth Rs 250 crore will be released, with plans for a Unity Mall in Amritsar and technology extension centres in Amritsar, Hoshiarpur, Jalandhar, Moga, Patiala and Mohali.