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Focus on education, agriculture in ₹2-lakh cr Punjab budget
Punjab FM Harpal Singh Cheema presents a ₹2.04-lakh crore budget for FY 2024-25, focusing on financial consolidation without new taxes or populist announcements.
Punjab finance minister Harpal Singh Cheema presented a budget of ₹2.04-lakh crore for financial year 2024-25 in the state assembly on Tuesday making efforts to consolidate finances on the back of higher revenues. Cheema did not announce any new taxes in his 80-minute speech.
There were no populist announcements ahead of the upcoming parliamentary elections, except plans for transformation for some more schools and a new canal for irrigation purposes, as the finance minister chose to focus primarily on consolidation of existing schemes and their improving coverage in his third budget.
Silent on ₹1,000 monthly sop to women
The announcement of ₹1,000 monthly cash sop to women by the Aam Aadmi Party (AAP) government in Delhi had created a buzz that Cheema might follow suit and fulfil the party’s “poll guarantee” to women voters in the state in the run-up to the Punjab assembly polls in 2022, but his budget speech was silent on it.
Replying to a question on the issue during the customary press conference later, Cheema said it will be fulfilled soon. “Already, 85% guarantees, including 300 units of free electricity and quality schools, have been implemented,” he said.
The finance minister did, however, announce schemes for transformation of 100 government senior secondary schools in rural areas as “Schools of Brilliance” and 100 primary schools as “Schools of Happiness” and establishment of hi-tech vocational labs in 40 schools in education sector, a new Malwa canal to utilise Punjab’s share of the Beas-Sutlej water and irrigate 1.78 lakh acres in four districts of the region and an initiative to develop horticulture crop clusters in major production zones.
Efforts towards fiscal consolidation
With the state’s macroeconomic condition being precarious, the finance minister has focused on the rising expenditure, fiscal deficit and debt-GSDP (gross state domestic product) ratio. The Punjab government has proposed spending of ₹2.04 lakh crore in the financial year 2024-25 which is only 2.93% more than the expenditure of ₹1.99 lakh crore mentioned in the revised estimates (RE) for 2023-24. In budget estimates (BE) for the current fiscal year, an expenditure of ₹1.96 crore was projected by the state government which was 9.15% higher than the actual of FY23.
At ₹30,310 crore, the state’s fiscal deficit as a share of GSDP has come down to RE of 4.12% in 2023-24 from budget estimates of 4.98%. Cheema plans to bring it down further to 3.80%, which, according to the state finance department, is well within the range of permissible limits. The fiscal deficit was 5.4% in 2022-23. Besides keeping the expenditure in control, the government is counting on an uptick in its revenue receipts for fiscal consolidation.
Buoyancy in own tax, non-tax revenues
Cheema’s accent on improving on own revenues is unmistakable as he is expecting the state’s revenue receipts to cross the ₹1-lakh crore mark in 2024-25. “Despite encountering substantial challenges, we have persistently strived to boost the state’s revenues. Both the state’s own tax revenue (OTR) and own non-tax revenue (NTR) have seen an upward trajectory,” he said. The state’s OTR is expected to go up to ₹51,400 crore as per 2023-24 RE from actual of ₹42,243 crore in 2022-23. Cheema had projected an OTR of ₹51,835 crore in 2023-24 BE. He expects buoyancy to continue in own tax revenues and has pegged it at ₹58,900 crore in his budget estimate for FY25 with a growth of 15%. The NTR is projected to go up by ₹1,195 crore, or say 11.8%, to ₹11,246 crore in FY 2024-25, according to the budget documents. In the current fiscal, the state is also expecting more revenue from its share of central taxes, revising it from ₹18,457 crore (BE) to ₹19,958 crore (RE). It hopes to get ₹22,041 crore from its share of central taxes next year.
The grants-in-aid from the Centre have seen a dip. Against a BE of ₹20,735 crore, it has been brought down to ₹17,530 crore in RE for the current fiscal. The state is expecting to get grants of ₹11,748 crore from the Centre in 2024-25.
GSDP estimated to grow at 9%
The FM said as per the advanced estimates provided by the directorate of statistics, Punjab is growing at a rate of 9.41% in the current year and the GSDP stands at ₹7,36,423 crore. “The GSDP has been estimated to grow at 9% to ₹8,02,701 crore in FY2024-25,” he added.
Cut in capital expenditure
In his budget, the FM has proposed a capital expenditure (capex) of ₹7,445 crore in FY 2024-25 which is way below the budget estimate of ₹10,354 crore announced by him for the current fiscal. The state government has missed its capex target in 2023-24 by a wide margin and brought it down to ₹6,406 crore in revised estimates. Cheema said that capex projects worth another ₹1,000 crore will be carried out through the Punjab Infrastructure Development Board (PIDB).
‘Centre withholding state’s funds’
During his speech, the finance minister also hit out at the central government for withholding funds, accusing it of apathy towards Punjab. “The withholding of the rightful share of the state, totalling ₹8,000 crore approximately, on account of National Health Mission (NHM), Rural Development Fund (RDF), Mandi Development Fund (MDF), and Special Assistance to State for Capital Investment has directly affected the developmental works and has put additional burden on the state treasury,” he said.
