Pinning hope on the state’s new excise policy, Punjab Finance Minister Harpal Singh Cheema on Monday made an array of announcements without imposing new taxes, covering all sectors fulfilling the Aam Aadmi Party’s pre-poll promises, including 300 free power units from July 1, free delivery of ration, setting up Mohalla clinics, filling 24,400 posts in government, regularisation of jobs for 36,000 contractual employees, among others, while presenting Rs 1.55 lakh crore budget proposals for 2022-23 before the Vidhan Sabha.
In a budget that aims at ‘saving money to spend money’ without taxing the people, the Minister said that the revenue augmentation will primarily be through the state’s new excise policy, which will yield Punjab a revenue increase of 56 per cent.
Cheema claimed that revenue receipts in 2022-23 are estimated to increase by 17.08 percent compared to 2021-22. He also maintained that the buoyancy in Goods and Services Tax (GST) collection will also get the state an increased revenue of 27 per cent over the previous year, besides an increase in the non-tax revenue by 11 per cent.
Apart from that, Cheema also highlighted notable measures, being undertaken by the government, for bringing fiscal prudency and efficiency in management of State Finances.
Cheema stressed that the government will fulfil its promise of giving 300 units of free electricity per month to each household from July 1, saying that it has already planned to finance this scheme by cutting wasteful expenditure and through enhancement of own tax revenue. Providing 300 units of free power will put an additional burden of Rs 1,800 crore on the state exchequer, said Cheema. The AAP government had announced giving 300 units of free power to every household from July 1.
Presenting the “tax-free” budget proposals, Cheema proposed to earn Rs 95,378.28 crore this fiscal. Since the state proposes to spend Rs 1,55,859.78 crore, the revenue deficit this year will be a whopping Rs 12,553.80 crore.
With a 14.2 per cent increase in Budget size as compared to previous year, the Revenue Deficit and Fiscal Deficit is pegged at 1.99 and 3.78 per cent for 2022-23.
As per the budget proposals, the total power subsidy of the state will be Rs 15,845.89 crore. Among major allocations, the Minister has allocated Rs 450 crore for regularisation of 36,000 contractual employees, Rs 497 crore for home delivery of atta, Rs 4,720 crore or social security pension covering 31.23 lakh beneficiaries; Rs 3,003 crore for development of rural areas in the state, rs 77 crores to set up Mohalla clinics, Rs 450 crore for providing Rs 1500 per acre financial incentives under ‘Direct Seeding of Rice’ scheme, Rs 66 crore for procurement of Moong at MSP, Rs 200 crores for Checking Stubble Burning Practices, rs 6947 crore for free power to farmers, among others.
At the same time, the Minister proposed to raise Rs 31,804.99 crore as market loans — an increase from Rs 27,362.74 crore raised by the state government the previous year. As per the budget papers, Rs 20,122 crore will be spent on payment of interest on states loans. However, the total debt servicing will take Rs 36,068.67 crore of the state’s earnings.
Describing the state’s new excise policy a “game changer” which would break monopolies or oligopolies that have developed in this sector over the years, Cheema said: “We are hoping for enhancement in our excise revenue to Rs 9,648 crore, which would be a whopping increase of 56 percent over 2021-22.”
Maintaining that efforts are already on to plug loopholes in GST collections, Cheema said that the state is estimating a buoyancy of about 27 percent in GST collections in 2022-23 “which would add around Rs 4,350 crore more to the State kitty”.
At the same time, Cheema also highlighted that the GST compensation regime is set to end in June this year. As per the budget documents, based on the trends of previous years, the State Government would be staring at a big hole left in its finances to the tune of Rs 14,000-15,000 crore in the financial year of 2022-23.
“We have already initiated revenue augmentation measures. I expect our revenue receipts in 2022-23 to increase by 17.08 percent compared to revised estimates of 2021-22, contributing Rs 95,378 crore to the State exchequer,” he said adding, “Hallmark to this ambitious feat is that this would be done without imposing any new tax on the people of Punjab”.
Cheema further said that the new policies in various sectors, including mining, are expected to uptick State’s Non-Tax Revenue by Rs 636 crore — 11 percent increase compared to the previous financial year. “Besides, share of Central taxes and Grants-in-aid from Centre are estimated at Rs 14,757 crore and Rs 28,731 crore, respectively,” said Cheema, while sharing ways and means for revenue generation.
To augment additional resource generation, Cheema also proposed to establish a ‘Tax Intelligence Unit’ which will equip the Finance Department to improve tax compliances under GST through taxpayer facilitation and communication.
Also to consolidate the State Finances and create adequate provision for disposal of debt commitments in future, Cheema said that the AAP Government has contributed Rs 1,000 crore to Consolidated Sinking Fund (CSF) of the State within first two months, taking the 10 cumulative contribution to Rs 3,988 crore, while the previous Governments could only contribute Rs 2,988 crore over all these years.
Cheema also announced the introduction of a ‘Fiscal Risk Statement’ aimed at bringing on paper various kinds of financial risk the State is exposed to. “The State has collaborated with the World Bank under Building Fiscal and Institutional Resilience (BFAIR) Project...With a total cost of Rs 1,655 crore, the project would be implemented over a period of five years to bring in institutional reforms to enhance resilience and fiscal sustainability,” he said.
