The Punjab government’s ambitious plan to bring down this financial year’s revenue deficit to Rs 3,123.31 crore from last year’s Rs 5,584.38 crore seems to be Herculean task. The state’s revenue deficit has already touched Rs 1,347 crore in the first four months of the current financial year, compared to Rs 1,111 crore during the corresponding period of last year.
Senior state government officials said that Punjab might rely on borrowings for its expenses and on growth in state taxes. In August, the state government announced a slew of measures in order to increase resources and bring down the revenue deficit, which would yield Rs 900 crore per year.
But the state’s resource mobilisation committee’s exercise of imposing new taxes may not help the government achieve its revenue deficit target. The recent imposition of taxes will help the state generate an additional Rs 525-600 crore, as the announcement was made in August and only seven months are left in the current fiscal year.
Senior state government officials said that the annual plan of Rs 14,000 for the current financial year would require additional resources of at least Rs 2,000 crore. The government proposes to generate this by cutting down expenditure and through better tax administration and austerity measures, besides imposition of new taxes. However, these measures would not be enough to bring down the revenue deficit to the targeted level, said a senior official.
Revenue deficit has always been a problem area for the state. Rising salary bills, pension and retirement benefits, financial assistance to the state electricity board and interest payments have contributed to an increase in revenue expenditure over the years. During the 10th plan period, 2002-07, the average committed liabilities on salary, pensions, interest payments and power subsidy amounted to Rs 104.89 crore. For the year 2011-12, the revenue deficit, according to budget estimates, was Rs 3,379 crore which was 1.36 per cent of the gross state domestic product (GSDP).
However, the actual revenue deficit would be likely to be about Rs 6,838 crore in 2011-12, which would be about 2.75 per cent of GSDP. Earlier, in an interaction with Business Standard, Punjab Finance Minister Parminder Singh Dhindsa said that the slippage in the revenue deficit target was mainly on account of non-receipt of deposits from extra-budgetary resources that amounted to Rs 1,500 crore, absence new additional resources measures as budgeted (Rs 500 crore) and increase in salary and pensions (Rs 620 crore).
The estimated revenue deficit for the current year, Rs 3,123 crore, is about 1.14 per cent of the GSDP against the target of 1.2 per cent. Normally, the revenue deficit is met by borrowings and increase in state taxes.
The state government is hopeful that the total revenue from taxes would be about Rs 23,842 crore in 2012-13 as against Rs 20,310 crore last fiscal.
