The parliamentary polls have just concluded and state polls are two years away. So there was no exigency for Punjab finance minister Parminder Singh Dhindsa to announce more sops in his third budget presented on Wednesday. But his words betrayed what economists have been saying for long -- Punjab can no more bear the burden of doles.
“We used to announce new welfare schemes every year. But this year there are no new schemes in the budget. We plan to take the path of fiscal consolidation. In the last two years, we tried to suppress our revenue expenditure but we have also to generate resources so that more money can be spent on development,” Dhindsa said while addressing media persons after his budget speech.
He also hinted that a few poll promises may have fallen out of favour with the ruling Shiromani Akali Dal (SAD). Tablets to schoolchildren and employability allowance to jobless youth may be given a quiet burial.
The results of parliamentary polls have instead created a new exigency -- fighting the menace of drugs. So Rs. 556 crore have been earmarked for skill development in nearly 3 lakh youths of the state and Rs. 109 crore for drug de-addiction and rehabilitation centres. The FM has also not doubled pensions of old, widows and disabled as promised in his party’s poll manifesto. Among existing schemes, he has earmarked funds for bicycles, scholarships and shagun for girls, Rs. 5,300 crore for power subsidy and Rs. 400 crore for atta-dal scheme, which has in the past seven years accumulated outstanding dues of Rs. 1,800 crore.
While Dhindsa used the budget armoury of fiscal consolidation to describe his budget, the revenue and fiscal deficit figures, despite the jugglery, reveal that Punjab has hit the end of the populism road, lest the poll year budget of 2016 makes populism a bigger necessity than prudence.
BAILOUT WITH CENTRAL SCHEMES
While the NDA regime at the centre, of which Shiromani Akali Dal is an ally, has not yet offered Punjab a fiscal bailout package, central schemes will comprise a third of state’s projected revenue receipts of Rs. 44,893 crore. The budget shows the state’s share in central taxes swelling from last year’s Rs. 4,515 crore (revised estimates) to Rs. 5,400 crore in this year’s budget estimates. The jump, Dhindsa explained, was on account of centre clearing last two years’ central sales tax dues of states, which for Punjab amounts to Rs. 300 crore. The remaining part of the surge in devolution funds was not demystified by the FM. The grants-in-aid from the Centre will jump by Rs. 2,865 crore to Rs. 8,230 crore, which Dhindsa said, is result of the Centre’s move to route funds for central schemes through the state’s consolidated fund. The budget’s “focus on infrastructure” in education, health, irrigation, agriculture, roads and urban development will be funded mainly by central schemes.
JUGGLERY OF FIGURES
Even as the revenue and fiscal deficits have overshot the targets of the fiscal consolidation roadmap set by the 13th finance commission, the budget has once again resorted to over-optimistic projections of revenue receipts and deflating revenue expenditure, including the subsidy bill. While in 2013-14, the state’s own tax revenue grew by just 6.6%, this budget expects it to grow three-fold by 18.2%. The power subsidy bill, on the other hand, is expected to fall below last year’s projections of Rs. 5,785 crore to Rs. 5,300 crore this year. The jugglery is stark in case of capital expenditure which was projected as Rs. 7,282 crore last year but was Rs. 4,232 crore in the revised estimates.
MAKING CAPITAL OUT OF LOANS
With revenue deficit looming at Rs. 4,252 crore, Punjab will again resort to market loans (Rs 10,000 crore), raise another Rs. 752 crore from securities issued against small savings and meet the excess of expenditure over receipts from public account (Rs 1800 crore). The Rs. 73,593 crore budget has Rs. 15,000 crore on account of ways and means advances.