E-Paper
‘Revenues hit, ₹1,600 cr spending cut proposed by depts’
FACE TO FACE: MANPREET SINGH BADAL, PUNJAB FINANCE MINISTER
A debt-ridden state, Punjab has been hit hard by the coronavirus-induced national lockdown at a time when finance minister Manpreet Singh Badal was slowly trying to put the state’s finances back on track, forcing him to now redo his budget maths. Manpreet spoke to NAVNEET SHARMA about the sharp dip in state revenues, his contingency plans and expectations from the centre. Edited excerpts:
What impact will the extended curfew have on the state’s economy?
There has been hardly any economic activity in the past three weeks. The state is suffering a loss of at least ₹7,000 crore a week in its GSDP (gross state domestic product). This has hit tax revenues. We are losing ₹150 crore a day in goods and services tax, value-added tax, state excise, etc. Add to this, another ₹30-odd crore loss to Punjab State Power Corporation Limited (PSPCL). We have to look at our budget calculations again.
How do you plan to cope with this unexpected situation?
It is an act of God and no one could have predicted it. I do not even see the end of the tunnel as yet. Once we get there, we can talk about solutions. With no tax coming, all we can do is slash our expenditure.
What kind of spending cuts are we talking about?
There is a cabinet sub-committee that has been formed by the chief minister to look into this whole gamut. Of the 42 government departments, 16 have given proposals for cut in expenditure of more than ₹1,600 crore, suggesting curtailment of projects or their deferment till the next financial year. Other departments are still to submit their suggestions. The sub-committee will meet on Wednesday. At this moment, we are just thinking of staying on course vis-a-vis our committed expenditure, including salaries, pensions, debt servicing, old-age pensions, Covid-19 expenses and power subsidy.
Which means capital expenditure will take a hit.
That’s true. We had proposed capital expenditure of ₹10,000 crore in the budget this year. We are still in the first quarter. I am hopeful things will stabilise.
When do you expect the economic activity to resume in Punjab?
We are lucky that procurement season is starting (from April 15). We have a bumper harvest and ₹24,000 crore will be infused for wheat procurement in next few weeks. Though all states are in lockdown, no other state has the advantage that we have at this moment. When farmers get money, economic activity starts. Then, there will be another ₹40,000 crore from paddy.
What are your expectations from the Centre? Is any help coming?
No, we have not got anything. We are still waiting for pending receivables such as GST compensation arrears. If they (Centre) are not collecting any taxes, I also have to curtail my expectations. But I foresee that at some point, all the state finance ministers will have to go to the Centre on these issues. I am sure the Centre will try its best to help the states. Right now, all they are talking about is an increase in the state’s borrowing limit (fiscal deficit), which will only add to our debt.
What’s your take on PM’s statement on the need for striking a balance between “jaan” (lives) and “jahan” (the outside world) for lockdown?
As the finance minister of a small state, I don’t have the status to say anything on his comment. But slogans alone won’t work, better planning is needed. We need two doctors – one who will take care on medical side and the other who can pull India out of this economic crisis. This is not a child’s play. India is in danger of falling into a debt trap. We will have to find some way out because the impending economic crisis could be bigger than coronavirus. If India can manage this crisis as well as help others with vaccines and medication, then you do not have to lead delegations to other countries for seeking investments. There will be so much goodwill that they will come on their own.
