Ten key takeaways of Punjab budget
A closer look at the bright, not-so-bright and blind spots of the budgetry proposals.chandigarh Updated: Mar 19, 2015 11:36 IST
A closer look at the bright, not-so-bright and blind spots of the budgetry proposals.
Skill Power: Unemployment being a serious problem, skill development is set to get a push with district level multi skill development centres – three of these in construction sector in partnership with renowned firms. Another 2,000 skill training centres have been proposed for girls and 500 for boys in villages to be run in schools. Fund allocation: Rs 200 crore.
Rural Push: Rs 600 crore ‘Mukh Mantri Pendu Vikas Yojana’ proposed for comprehensive development of villages through provision of basic amenities. Though it is being seen as an attempt to rebrand CM’s ‘sangat darshan’ programme, the scheme may help improve rural infrastructure, besides bringing more accountability and transparency. The CM’s programme was being backed through off-budget funds.
More fund flow: Rejecting the ‘one-size-fits-all maxim’ of the centrally sponsored schemes, the Akali government wanted more say.
Its ministers publicly expressed this view. With the increase in devolution of funds from the centre to states, Punjab will get Rs 2,598 crore extra. The centre will also hand over a few schemes to the state which it can run as per its needs.
On sound footing: A high achiever in enrollment for Aadhaar, Punjab has covered 92% of its population, generating over 2.54 crore cards. It is also the third state to be fully covered in the Jan Dhan Yojana. The state has started ‘direct benefit transfer’ (DBT) in some areas in a limited way. Not a small achievement at all, but the government is still to throw its weight behind DBT due to political reasons. Given the irregularities in fund transfers, it will have to opt for the scheme sooner than later.
Revenue deficit: Remains a challenge. The FM has pegged it at Rs 6,394 crore, 1.6% of GSDP, in 2015-16. But then it remains just a number till he achieves it. The reason: his aim of containing it to 1.22% of GSDP in the previous year was way off the mark.
Against Rs 4252 crore in budget estimates, the FM ended the year with Rs 6,240 crore as per revised estimates for 2014-15. The government’s spending climbed more than its earnings.
Tax trouble: The state’s own tax revenue (OTR) projections are uninspiring. After clocking an impressive double-digit growth in OTR last year, the government is looking at a minuscule 3% increase in 2015-16. As against Rs 28,560 crore in 2014-15 (revised estimates), it is estimating Rs 29,351 crore next year. A negligible increase of Rs 90 crore has been estimated in Value-Added Tax (VAT), which has been the driving force behind the tax growth in the past, in 2015-16.
Good Intent, no road map: ‘Fiscal discipline’, ‘living within the means’, ‘judicious use of scarce resources’ are some key expressions used by the finance minister to express his intent. But his budget document contains no clear plan to achieve these objectives. The debt liability is going up continuously – pegged at Rs 1.24 lakh crore in 2015-16. In short, it is more intent, less content.
Committed liabilities: Rising committed liabilities – salary, pensions and interest payments – remain another area of concern. The outgo on these is likely to jump by 10% to Rs 35,436 crore in 2015-16. The FM’s salary and wages bill has been estimated at Rs 18,354 in 2015-16, up from RS 16,571 crore as per the revised estimates of 2014-15. The committed liabilities are expected to eat up almost 70% of the state’s revenue receipts.
Drain of Doles: Punjab is facing serious fiscal constraints, but has failed to contain the soaring subsidy on free power to the agriculture sector. It is set to see a sharp 15% jump, going up from Rs 4,778 crore in 2014-15 to Rs 5,484 crore in 2015-16. Never mind if free power for agriculture tubewells is being used for non-farm purposes. Also, thousands of applications for new tubewells connections are pending since 1997. If these also get approved, the power subsidy bill would see further increase.
Fiscal Fudging: A lot changes between budget and revised estimates in Punjab budget. The CAG in its reports has been pointing out that state’s revenue projections were inflated and expenditure under-reported. This budget too may fumble on revenue growth, expenditure and finally the deficit in the revised estimates for 2015-16 as the projections are liberal in revenue projections but not in expenditure.