Tax revenue biggest concern it has not grown as expected
March, 14th 2016
As you are ready with the annual budget, how do you see state’s fiscal health?
We have successfully improved our fiscal situation. We have managed our fiscal deficit within the recommended limit of 3 per cent as per the fiscal consolidation roadmap laid out by the 13th Finance Commission. We have achieved this target with 2.97 per cent deficit. Similarly, the state’s debt should be less than 38.7 per cent of the GSDP in 2014-15 and though the debt now stands at Rs 1.24 lakh crore, it is 32.27 per cent of the GSDP. Next year, the debt will be 31.34 per cent of the GSDP.
How many times did the state go in overdraft this fiscal?
I do not remember it off hand. But it was much lesser times compared to last.
What is your biggest concern?
The tax revenue. It has not grown as it should have. This affects the cash flow. Otherwise, the situation is stable. Coming year would be better.
Are you planning to introduce any new taxes?
Next year’s budget proposal is a secret document. It is the privilege of the Assembly to learn about any new proposals before anyone else.
Who is to be blamed for the static tax revenue?
The global economic slowdown. collections on account of stamp duty on registration of property have come down from Rs 3,000 crore to Rs 1,500 crore due to slump in real estate market. Also, the revenue generated through registration of new vehicles has also come down as lesser new vehicles were purchased by people in the state.
What about poor growth of VAT?
The minuscule growth in VAT collections is not unique to Punjab. It is a pan India phenomenon. I have had discussions with finance ministers of states like Maharashtra, Chhattisgarh and Gujarat and similar trend exists in those states as well. The silver lining is that we have not recorded a negative growth in VAT.
You present a rosy picture about the fiscal health. Why are state’s properties being mortgaged?
Not a single property was mortgaged this year. Two years ago, PUDA mortgaged properties to generate funds. We have already returned half of the loans generated against these.
What about the pending bills?
We have pending bills worth Rs 2,000 crore. But considering that we have already paid bills worth Rs 40,000 crore this year, an amount of Rs 2,000 crore is minuscule. Each year, during March, we are in a capacity of clearing bills worth Rs 4-5,000 crore. Hence, these bills would be cleared as we come to a close. Last year, we had unexpected expenditures including sugar subsidy and Rs 300 crore worth compensation to farmers.
You have always frowned upon the fat salaries bill. What burns a hole in the state’s pocket?
We have a fat salaries bill amounting to Rs 28,000 crore. It is a cause for concern for us. The bill has been growing by 10-15 per cent every year in the last five years. The implementation of pay commission reports, arrears and installments of DA really burn a hole in our pocket.