All eyes will be on Punjab's mounting fiscal deficit when finance minister Parminder Singh Dhindsa presents his budgetary proposals for 2013-14 on Wednesday.
As Dhindsa has already hinted at "no major achievement" in bringing down the state's overall fiscal deficit, which stood at
9,633 crore on March 31 last year, the figure is only likely to go up.
In the backdrop of a glaring revenue deficit of Rs. 5,584 crore in 2011-12, the finance minister had projected that the figure would decline to Rs. 3,123 crore in 2012-13. How accurate Dhindsa has been in his projection will be known during his budget speech.
While presenting the last budget, Dhindsa had revealed that the state's overall debt was Rs. 78,236 crore. He had projected that it would go up to Rs. 87,518 crore by March 31, 2013. With the level of debt not sustainable, Dhindsa had said that the gross borrowings in 2012-13 were likely to climb up to Rs. 13,204 crore. Of this, Rs. 3,606 crore was projected to be paid as principal and Rs. 6,662 crore as interest, leaving just Rs. 2,936 crore at the disposal of the state government.
In financial year 2012-13, Punjab has exhausted its borrowing limit of 3.5% of the Gross State Domestic Product (GSDP). With 80% of the net borrowings utilised to fill the revenue deficit, the government does not have ample funds to meet the capital expenditure.
Notably, the power subsidy extended to farmers accounts for 12.5% of the state's total revenue receipts. But with the government unlikely to do away with this freebie, burdening people with more taxes seems to be the easy way out, though this can be avoided by ensuring transparency in collection of taxes and excise duty. Is Dhindsa ready for the challenge?
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