Punjab presents lacklustre deficit budget in Assembly

Annual outlay up 15%; VAT on cigarettes, soft drinks see steep rise

The Punjab government has raised the value added tax (VAT) on soft drinks to 20.5 per cent from 13 per cent and on cigarettes to 50 per cent from 20.5 per cent in the state budget presented on Wednesday. Both the proposals are likely to generate an additional revenue of Rs 180 crore to the state exchequer annually.

Speaking to Business Standard after presenting the budget in Assembly, Punjab Finance Minister Parminder Singh Dhindsa said: "Better tax administration coupled with tax compliance and increase in state's own revenue, expected to increase 17 per cent in 2013 -14 from 2012-13, would help in meeting the revenue and fiscal deficit target as set by the 13th Finance Commission. In 2013-14, the state own's tax revenue was likely to touch Rs 28,524 crore, an increase of Rs 4,206 crore from 2012-13(revised estimate)."
 

Highlighing the Plan proposal for 2013-14, he said the annual plan has been pegged at Rs 16,123 crore, an increase of 15 per cent over last financial year's Rs 14,000 crore. With major focus on social services, Rs 5,963 has been earmarked for this sector, followed by energy (Rs 3,224 crore) and transport (Rs 1,920 crore).

Presenting the budget, Dhindsa in his budget speech mentioned that the revenue deficit of the state for 2013-14 (budget estimate) at Rs 1,747 crore is 0.57 per cent of GSDP against the target of 0.6 per cent as set by the 13th Finance Commission. The revised estimate for 2013-14 is likely to be Rs 4,758 crore.

He said that inadequate support from the Centre and implementation of Pay Commission recommendations also led the deficit to 2.63 per cent of GSDP in 2011-12. He also added this was the only parameter of fiscal consolidation path recommended by 13th Finance Commission, which the state is facing difficult to meet.

The revenue deficit has always been a problem area for the state. The rising salary bill and wages, pension and retirement benefits and interest payments are the committed liabilities of the state government. The expenditure on these liabilities have been rising over the years. It was 92.78 per cent of revenue receipts in the year 2011-12 and likely to be 71.36 per cent in the year 2012-13(revised estimae). Further, it is likely to be 65-67 per cent in the year 2013-14(projected).

As far as debt is concerned, the total outstanding debt during 2012-13 is likely to increase to Rs 92,804 crore (31.35 per cent of GSDP). For the year 2013-14 (BE) the state plans to borrow Rs 9,261 crore and the outstanding debt by the end of the year 2013-14 would be about Rs 1,02,282 crore which will be well within the target for debt to GSDP ratio.