He is raring to go. Presenting his fifth budget next week — last for this term of the Punjab assembly— finance minister Parminder Singh Dhindsa is upbeat that despite the economic slowdown he will be able to scrape through a decent budget for Punjab. Dhindsa told assistant editor Chitleen K Sethi that the challenge is in balancing the demands of various sectors in an election-year budget. Excerpts of the interview:
Q. What can one expect from the last budget of your term?
A. It is not going to be a please-all budget. I think what we have rustled up is a balanced document, which basically caters to the pressing needs of all departments. Though the state’s agriculture sector is the most distressed, there is an adequate focus on other sectors as well.
Q. How are the numbers adding up?
The economic slowdown across the world, especially the stark fall in commodity prices and also the real estate crashing have led to a reduction in our revenue collection this year. Our VAT and stamp duty collection are down, and so are the tax receipts. What has kept us afloat this year is the increased devolution of central taxes. Earlier, we were getting Rs 4,700 crore; now it is Rs 8,000 crore.
Q. Are you satisfied with this much from the Centre?
Yes and no. It has been our constant refrain with the Centre to change the criteria used in shelling out share of central taxes. It should be based on population, not the size of the state or the per capita income. Due to these criteria, larger states like Madhya Pradesh, Uttar Pradesh and Bihar get a large devolution of grants. These states can actually run just on the grants and don’t have to even contribute anything to the GSDP. If the population criterion is followed, we will at least get 2.5% of the central taxes in tune with our share in the population. Currently, we get 1.5% which has also been increased only last year from 1.3%.
Q. What is the biggest bane of Punjab finances?
We have to pay a whopping salary-pension-retirement benefits bill. This time, it is Rs 28,000 crore, a new high. It is a cause for concern as Punjab’s salary bill is becoming unsustainable. I don’t think we can take any more hike in salaries. In any case, salaries and pensions increase every year due to increments, promotions and dearness allowance. A salary bill is something that one is stuck with. Once given, we cannot cut salaries.
Q. Deputy chief minister Sukhbir Singh Badal has been going to town claiming that Punjab finances are in the pink of health while in reality there are bills worth crores pending to be cleared for months.
The financial health of a state cannot be assessed in terms of the day-to-day expenditures, pending bills and the treasury going into overdraft. What should be seen is how robust the state’s fiscal health is in terms of the debt to GSDP percentage, the GSDP and per capita income. On these three parameters, we are doing well; in fact, much better than many larger states.
Q. The state is in the grip of a huge debt as your term ends. How do you explain that?
By now, we have clocked a debt of Rs 1.25 lakh crore. When we took over, it was Rs 50,000 crore. Though the total debt has increased, it has to be seen in terms of its percentage as compared to the GSDP. When the debt was Rs 50,000 crore, the GSDP was Rs 1,27,000 crore. Then the debt-GSDP ratio was about 40%. Now, the GSDP is ` 4,08,000 crore and the debt-GSDP ratio is 32%. It has come down. This is the percentage of debt-GSDP ratio of most states in India. Punjab is not worse than others in that sense.