Punjab finance minister Parminder Singh Dhindsa feels that the state has not got its due from the BJP-led NDA government at the Centre, even though the ruling Shiromani Akali Dal (SAD) is one of the oldest allies of the saffron party. “Though the state is getting enough funds from the Centre, we, as a coalition partner, have high hopes from Prime Minister Narendra Modi. We need a special non-plan economic package that will boost the economy and fiscal health of Punjab,” Dhindsa said in an interview with H T Principal Correspondent Vishal Rambani. Excerpts:
HT: The NDA is going to table the GST (goods and services tax) bill in Parliament, but the SAD has again red-flagged the issue. Is GST going to be beneficial for Punjab?
Dhindsa: GST is good for the entire economy, but I can’t say as of now whether it’s good for Punjab also. The state has some issues related to the revenue-neutral rate (RNR). The government has recommended RNR of 15-15.5% and standard GST rate of 17-18%. In this scenario, manufacturing states such as Punjab and Gujarat stand to lose. Also, we will lose almost 12% of our revenue collection from foodgrain purchase tax as GST does not include this tax.
The state’s revenue has registered lowest growth in the past 10 years. Are the alarm bells ringing for the economy?
I agree that the state’s revenue growth is not what we anticipated. It’s because of the overall slow economy and low consumption. However, the state’s fiscal health is good. The media is projecting a wrong picture.
You claim that Punjab is in good fiscal health, but the revenue deficit is rising, debt is rising. You are pledging properties to garner funds.
Here’s where the media is wrong. Punjab’s revenue deficit is rising, but if we consider that the state is spending `7,000 crore through the Punjab Infrastructure Development Board (PIDB), Rural Development Fund (RDF) and Punjab Municipal Infrastructure Development Corporation, then the deficit is nearly `3,000 crore or less than 5% of the budget. Moreover, we pledged properties such as jail buildings after raising new ones. As there is a slump in the property market, instead of selling properties at throwaway prices, we decided to take loan against the same. Punjab Urban Planning and Development Authority (PUDA) has already repaid one-fourth of the loan amount.
Then why didn’t you bring these funds into the account books?
The reasons are political and social. We want a dedicated fund for development through PIDB, RDF and others. We are not running a company to make profit. We are running a government, which aims to implement social and infrastructural reforms. Social and developmental bindings force us to keep these funds out of the purview of the budget, as bringing them into account books will increase our planned spending.
Are you happy with the devolution of funds from the NDA?
No package has been given to the state, despite being promised in the 2014 election campaign. People have started saying that former PM Manmohan Singh was better for Punjab than Modi.
First, Modi has no magic wand to correct the fiscal blunder which the Congress government committed. Congress misrule has left the business sentiment at the lowest ebb, which led to low tax collections. However, Punjab still has high expectations from the NDA, and these will be met only when we will get a non-plan fiscal package. The 14th Finance Commission had done injustice with Punjab by rejecting our claim, citing power subsidy etc. We can’t stop giving subsidy to farmers. We have strongly taken up the issue with Union finance minister Arun Jaitley and PM Narendra Modi. We anticipate an early solution. We have apprised the NDA leadership about the expectations of Punjabis.
The employee wage bill is already 70% of the budget, but you still announced the Sixth Pay Commission and 1 lakh more jobs. From where will the money come?
I agree that as the FM, I have flagged some issues related to fresh recruitments, but it’s not the individual’s will that prevails. The cabinet takes a collective decision. We will generate more funds as the economy is recovering. However, I agree that the fat salary bill, which is rising at the rate of 10% every year, is a worry for the state. And I hope that the Pay Commission will take a call on pay revision by considering the fiscal indicators.
Deputy chief minister Sukhbir Badal has announced to spend `10,000 crore on development.
We are going to spend a lot on development. The deputy CM will unfold this agenda in the coming days. The Centre has promised some funds for rural and urban infrastructure. We will get `2,500 crore from the 14th Pay Commission, and some funds will be generated by PUDA and PIDB.