Tough task at hand for Punjab FM to rev up revenue

Punjab Finance Minister Parminder Singh Dhindsa will face an uphill task of mobilising funds for spending on agriculture and infrastructure projects, and meeting "ballooning" salary bill, when he presents fifth and last budget for SAD-BJP led government on March 15.
Lower tax revenue receipts are already a area of concern for the state government which is already reeling under a massive debt burden.
With the state government seeking to shun the tag of "bankrupt" state for which the current regime blamed the opposition parties as "false propaganda", the FM will also have to think "out of the box" on how to reduce state's debt burden which is set to reach Rs 1.25 lakh crore in 2015-16.

Deputy Chief Minister Sukhbir Singh Badal has been claiming the debt as "productive debt", saying government successfully reduced debt to GSDP ratio in the last nine years, but opposition parties continued to launch "vitriolic" attack against the SAD-BJP regime for turning Punjab into "debt ridden" state.
With Punjab facing assembly polls in 2017, the Akali government is unlikely to put any financial burden on people by proposing new taxes in the last budget.
"The most important issue for Punjab Finance Minister in upcoming state budget will be to focus on resource mobilisation which is essential for the state to meet its expenditure," R S Ghuman, Professor, Nehru SAIL Chair, Centre for Research in Rural and Industrial Development (CRRID), said today.

"The financial position of Punjab is very bad. It is not able to meet its routine expenditure and it is mostly depending upon borrowings and ways and means after exhausting all other resources," he said.

"Growing debt, salary, pension and interest bill is a serious problem for the government to handle and it is a tough task lying ahead for the Finance Minister to deal with it given the low growth in revenue receipts," he said.
"But I do not think, the FM will go for imposing any taxes in the wake of assembly elections," said Ghuman.
Salary, wages, pension and interest payment on borrowings are projected to consume over 75 per cent of state's total revenue receipts of Rs 46,229 crore, with revenue deficit estimated at Rs 6,393 crore for 2015-16.

Dhindsa had already described high salary bill as "biggest problem" and said the total financial burden of salary, pension and retirement benefits bill had reached Rs 28,000 crore on state exchequer.
Significantly, the state is also unlikely to achieve its tax revenue collection target of Rs 29,351 crore for 2015-16, with state government blaming the low revenue mobilisation in the wake of economic slowdown, lower VAT collection from fuel and lesser mobilisation from property registration.
"Agriculture is in deep crisis as farmers are committing suicides. There is a need for coming out with a roadmap backed by policy mechanism to address this most pressing issue," Ghuman, an economist, said.

"The government will have to focus on employment generation particularly in rural sector where income earning opportunities are lesser. A thrust is also needed to given on providing good education, health services and most importantly agriculture sector," he said.