'Agriculture will insulate us from financial turmoil'

Q&A: Manpreet Singh Badal

Despite the bearish industry and sluggish exports, Punjab expects to withstand the repercussions of the global financial meltdown. In a conversation with Komal Amit Gera, the state’s finance minister, Manpreet Singh Badal, explained that market forces would themselves restore the balance in the system. Quoting the agriculture sector in Punjab as the quintessence of the economy, he discussed the various aspects of the state’s economy and the reason for the brighter outlook. Excerpts:

Do you foresee the repercussions of global financial meltdown on Punjab’s economy?
I do not assert the total insulation from the heat of the crisis that has engulfed the entire globe. But our dependence on agriculture and favourable weather conditions in the past two years would provide us a big cushion against the financial turmoil.

How can agriculture sustain the income of the farmers in the current scenario?
As I told you, rainfall in the past two years has been generous. So we had record wheat and paddy production during this period. Icing on the cake came from the revision in the minimum support price (MSP) of paddy and wheat, the main crops grown in Punjab. This enabled the farmers to earn an additional Rs 7,000 crore last year.

How much growth in agriculture do you expect next year?
We expect to register a growth of over 6 per cent if the weather conditions remain favourable.

Do you expect any dent in the collections of value added tax (VAT) due to the downturn?
We did exceedingly well in the first five months of this financial year with a rise of 35 per cent in the collection of VAT compared to last year. However, the signs of slowdown were observed September onwards with the growth figures dipping to 15 per cent.

Did you frame any strategy to cover up your losses from VAT?
The loss of revenue from industrial output can be compensated from an upsurge in foodgrain production. The taxes collected in the process of procurement of foodgrain can compensate the loss to some extent.

The exporters and manufacturers in Punjab are apprehensive of the business prospects in the current scenario. Any advice for them?
I am in constant touch with the stakeholders in industry of the state. They should not worry much as constant income from agriculture will keep their demand intact, and at least the domestic demand will help them utilise their capacities.

Did you propose any cut on government expenditure in the current scenario?
Our expenditure are minimum in the sense that we have rightsized the staff at all hierarchies. About 73 per cent of the annual state budget constitutes the expenditure on pension, salaries and interest payments. But this is our legacy and cannot be restructured in a short span.