Ruchika M Khanna. Tribune News Service
Chandigarh, December 28. Punjab’s fiscal health continued to be a cause for concern this year. The state’s rising debt; the widening gap in revenue and expenditure; the state defaulting on payment of salaries; the slow revenue generation and the diminishing private investment in the state are some of the issues that immediately need to be addressed.
The good news, however, was that the state government realised that it needed to generate additional resources.
Though the Budget 2012 did not impose any new taxes on the people, the government was forced to go in for additional resource mobilisation in September, so as to ensure that it was able to bring down the revenue deficit.
Punjab had reported a revenue deficit of Rs 6,838 crore in 2011-12, which had shot up substantially in the last financial year as against the estimate of Rs 3,379 crore. The state has set a target to bring down the revenue deficit to Rs 3,123 crore during this fiscal.
The government first hiked the electricity duty and the collector rate (for getting stamp duty). As part of the additional resource mobilisation drive, the state decided to impose property tax; increase VAT rate by 0.5 per cent; have a single slab for motor vehicle tax; and impose social infrastructure cess on property registration. These measures would help the state raise Rs 900 crore in an entire financial year. However, since these measures came into force from September, the state is expected to earn just Rs 600 crore during this financial year.
With the increase in electricity duty and collector rate, earning an additional Rs 550 crore from excise collections and through the additional resource mobilisation measures, the state has made a provision to rake in Rs 2,400 crore during this fiscal. However, this may not help Punjab bring down its revenue deficit by 100 per cent, as proposed by the Finance Minister, Parminder Singh Dhindsa, while presenting the Budget in June this year.
But even as these measures were initiated, and the state exhausted all means to keep the inflow of cash, the committed expenditure seemed to be much more than the cash inflow in the state treasury. In fact, September and October were bad months for the state, as it had bills worth Rs 2,300 crore pending for clearance. During this period, the state government, having exhausted its overdraft limit of Rs 367 crore, made an overdraft of Rs 43 crore over and above its limit. The state continued to raise money from the market through sale of its state development loans,
as its monthly income remained short of Rs 500 crore, from its monthly expenditure, through most part of the year.
As the state staggered with its rising salary and pension bills, private investment in the state remained elusive. As the government struggled to come out with a new industrial and real estate policy to woo investors, very little investment fructified in the state, mainly because of the slowdown in the country’s economy.
Though major Punjab-based industries continued with their investment in other areas – where land and labour were cheaper and power was surplus – Punjab failed to attract any major investment.
Deputy Chief Minister Sukhbir Singh Badal, however, tried to woo private investors by forming a core group of top industrialists to advise him on investment promotion, especially after he took over charge of the department of investment promotion.
The only good thing to have happened in the state on the industry front was the formal inauguration and commissioning of the Rs 20,000 crore Guru Gobind Singh Refinery at Ramsara, near Bathinda, in April.
A joint venture of Hindustan Petroleum Corporation Ltd (HPCL) and Mittal Energy Investment Pvt Ltd, the refinery will produce LPG, petrol and diesel, and value-added products like polypropylene, food-grade hexane, solvents, naphtha and aviation fuel.
It is expected to generate a sizable number of jobs directly and indirectly, besides a source of assured supply of petroleum products in Punjab and North India.
A study has indicated growth in the state GDP in the range of Rs 5,000 to Rs 7,000 crore if the associated downstream industry comes up in a petrochemical hub. The other major investment that came in Punjab was the German cash and carry major, Metro, spreading its business in the state by opening its third distribution centre at Zirakpur in October.
The company already has two stores in Punjab at Ludhiana and Jalandhar and proposes to start another store at Amritsar. With this, the company’s total investment in Punjab will be over Rs 400 crore.