There is a sense of inevitable boredom with modern-day budget speeches. There are several reasons behind it. In decades gone by, the finance minister used to announce new governmental schemes, policies pertaining to industry, commerce, finance, import-export, agriculture, land use etc. But the way our polity at the national and provincial levels has evolved in the past two decades or so, fresh announcements can be made any time throughout the year, as the minister of the portfolio concerned doesn’t want to let go of his moment under the sun.
So, the fact is that the public doesn’t wait in suspended animation about a budget speech as it used to till the early 1990s. So, are budgets irrelevant? On the contrary, I have always felt that the significance of the modern-day finance minister (FM) has increased by several notches. Now, shorn of any compulsion to announce fresh schemes, the FM can uninhibitedly act as the conscience-keeper of the state. It is the responsibility of the FM to project the right image of the government’s finances before the public, raise red flags in case of fiscal alarm and suggest the right way forward.
NO BLUEPRINT FOR FISCAL FIX
On these yardsticks, I must say that young Parminder Singh Dhindsa’s budget speech on Wednesday disappoints me. Rather than highlighting the state of fiscal emergency that looms over Punjab, the finance minister has opted to go for equivocations and obfuscations. There used to be a sacrosanct appeal to the budgetary numbers. A government would never commit what it couldn’t deliver. But the sheer turpitude of the present government is evident from the glaring difference between the revenue deficit figures. As per the budgetary estimate of the last fiscal, the revenue deficit for this year should have been closer to Rs 4,352.63 crore, but in reality it is Rs 6,393.86 crore. That is a transgression of over Rs 2,000 crore. I mean, how do we expect the rest of India to take Punjab seriously when we exceed our revenue deficit estimate by almost 50%!
Despite this shocker, nothing in the finance minister’s speech or the subsequent government releases contains any sense of concern. Forget about concern, there is no admission that the state has descended one more step towards a fiscal disaster. Take a moment, and try and decipher the enormity of this deficit — a revenue deficit of Rs 6,394 crore means that Punjab would be borrowing more than Rs 500 crore every month to finance its expenditure. And if a government is impudent enough to anyway breach its budgetary target by 50%, what reasons do we have to trust that this Rs 6,394 crore figure isn’t exceeded again. An identical increase next year would lead the revenue deficit to staggering proportions.
SHOW ME THE MONEY
Under such circumstances, I wonder where does the finance minister hope to find money for the new schemes that he has announced in the budget. This appears all the more challenging since there is not even a single new tangible revenue mobilisation scheme that appears in his budget speech. And while the discussions about revenue deficit are always a matter of conjecture, how does the government answer for the inexplicable monstrosity of fiscal deficit that stands at close to Rs 12,000 crore?
The budget is full of rather brash and insincere self-congratulatory messages. There are reasons to be suspicious of the figures mentioned by the finance minister. There is a rather modest increase in the plan size from Rs 20,100 crore to Rs 21,174 crore. Even with a modest increase, there are doubts about the compliance. As per the government’s own admission, the compliance is barely 70%, so the so called 5% increase in the plan size is also nullified. As per the audit figures, the state’s compliance till December 2014 was barely 60%, so that 70% figure also appears doubtful. One would have to await the audit figures that will be released in around 6 weeks to get the real picture.
One is particularly perplexed at the finance minister’s attitude towards the central schemes. Since the present government is part of the ruling alliance in the Centre, this is what prevents him from admitting clearly that Punjab has been on the losing side in the latest finance commission’s report. Or perhaps he is astute enough to know that criticising the finance commission would actually highlight the Punjab government’s own failure in correctly projecting the interests of the state.
The next finance commission is a good five years away, and it is now clear to everyone that even with a favourable government, Punjab hasn’t benefited. As regards the other 66 central schemes, it is evident, that in view of the large revenue deficit, most of the money from these schemes would be spent on operating expenses of the state — towards paying salaries, funding interest and other government expenditure.
ROAD TO NOWHERE
So where does it lead to? Another state budget has come and gone and Punjab continues its march towards fiscal anonymity. Nothing changes on the ground. The nature of federal financing in a parliamentary democracy will ensure that Punjab will continue to crawl along. It will not pick up the speed that fiscally nimble provinces will do. This stagnation is a clear and imminent danger. The present generation of Punjab’s politicians may not feel it imperative or worthwhile to bite the bullet. They feel it makes better sense to show a false sense of bravado. But in doing so, we are leaving a province for the generations to come, that may be beyond fiscal repair. That is the biggest tragedy for Punjab. One expected a young finance minister to understand and address such concerns. Alas, it was not to be.
(The writer, former finance minister of Punjab, is president of the People’s Party of Punjab. The views expressed are personal.)