With its tax revenue plunging to a new low post-demonetisation, the already cash-stressed Punjab Government has demanded compensation from the Centre.

There has been a sharp dip in the government’s VAT collection, excise collection (on liquor sales) and stamp duty collection (on the sale of property). With the Centre looking to gain almost Rs3 lakh crore because of demonetisation, the state wants compensation so that it can meet its committed liabilities. The demand was raised by Finance Minister Parminder Singh Dhindsa during the GST Council meet held recently.

Sources in the Finance Department said though the exact loss in revenue receipts would be ascertained next month, the daily VAT collection had seen a drop of almost 50 per cent. Against a daily VAT collection of Rs30 crore, the average since November 8 has been Rs14 crore. There has been a minimal stamp duty collection, with virtually no sale of property taking place across the state. The third major source of revenue receipts — licence fee to be collected from liquor contractors — has not been recovered.

The state is already reeling under less than the targeted growth rate. In the beginning of this month, it was the first time that the government went into double Overdraft (OD) by using over Rs2,050 crore beyond its limit. The state has exhausted its ways and means advances (WMA) limit of Rs925 crore, an overdraft of Rs925 crore and Rs200 crore beyond it. The state has cleared the OD since then.

The only saving grace is the sale of paddy, which will put Rs1,350 crore into the state’s kitty. While Rs600 crore of this tax on paddy has already been deposited, the remaining will be deposited by the month-end.

Dhindsa told The Tribune that initially different segments of revenue had shown a decline of 20-50 per cent, but things were expected to look up now. “We have also asked the Centre to relax the FRBM (Fiscal Responsibility and Budget Management) rules by lowering the fiscal deficit target by 0.5 per cent (the original target is to bring down the deficit to 2.88 per cent),” he said.

He added after the GST rollout, the state had been assured an annual 14 per cent increase through compensation by the Centre.