Chandigarh, December 26
Punjab continued to struggle to mop up its revenue resources all through 2013, but to little avail. The financial situation of the state had perhaps never been as bad as during this year when the state struggled to meet its committed liabilities and pay salaries through almost four months of the year.
Though the state’s financial position improved in November, this year will be remembered as one of the toughest for the state’s finances.
Properties mortgaged
Left with no means of additional income and burdened under ever-increasing expenditure, the state, through Punjab Urban Planning and Development Authority (PUDA), was forced to mortgage government properties and raise loans to carry on its day-to-day business.
The state continued to avail its ways and means advances (WMA) and even remained in overdraft for many days, though both the WMA and overdraft were cleared by the state government on time.
Revenue mismatch
Through the first eight months of the year 2013, the revenue growth in the state had slowed down substantially. The growth in revenue was just over 10 per cent whereas the growth in expenditure remained at almost 19 per cent. This growth in expenditure was mainly because of the ever-increasing salary, wages and pension bill of the state government, which is growing at 18.54 per cent on a year-on-year basis. Thus, the mismatch between what the state earned and what it spent continued to add to the state’s revenue deficit.
DA installment not paid
In practical terms, it meant that the state was unable to pay salaries to its over three lakh employees in time; the bills of employees and departments received by the treasuries were not cleared for months; and, the state was unable to give two DA (dearness allowance) installments to its employees.
Even the first DA installment given to employees was released partially. What added to the state government’s woes was the inability of the Union Government to release the Rs 680 crore that is pending with it as the CST (central sales tax).
Some positive signs in Nov
Towards the end of the year (November onwards), the state government’s fiscal health started showing signs of recovery. This is inspite of the fact that the state continued to dither on increasing VAT rate or on imposition of new taxes, for fear of alienating the urban voters from the Akali-BJP fold, especially with the General Election round the corner.
By this time, the government had finished most of its debt-serving, which eased the pressure on the state’s monthly income and expenditure mismatch. Growth in revenue, too, was witnessed after the government started realising property tax, and from composition fee charged for regularisation of illegal colonies —though this money went into the kitty of the Local Bodies Department and PUDA, respectively.
Festive season to rescue
With the festive season at its peak in November, the high sale of goods, especially consumer durables, in the state led to Punjab’s VAT collections increasing and showing a growth of 9 per cent, and the state’s non-tax revenue increasing by 20 per cent.
But inspite of these growth figures, Punjab will continue to be revenue-deficit this year, though this deficit is likely to be less (around Rs 3,500 crore) as compared to the revenue deficit of Rs 4,219 crore in 2012-13.
Fiscal indicators (April-Nov 2013)
Revenue receipts: Rs 22,250 cr
Expenditure: Rs 23,771 cr
Deficit: Rs 1,521 cr
Punjab continued to struggle to mop up its revenue resources all through 2013, but to little avail. The financial situation of the state had perhaps never been as bad as during this year when the state struggled to meet its committed liabilities and pay salaries through almost four months of the year.
Though the state’s financial position improved in November, this year will be remembered as one of the toughest for the state’s finances.
Properties mortgaged
Left with no means of additional income and burdened under ever-increasing expenditure, the state, through Punjab Urban Planning and Development Authority (PUDA), was forced to mortgage government properties and raise loans to carry on its day-to-day business.
The state continued to avail its ways and means advances (WMA) and even remained in overdraft for many days, though both the WMA and overdraft were cleared by the state government on time.
Revenue mismatch
Through the first eight months of the year 2013, the revenue growth in the state had slowed down substantially. The growth in revenue was just over 10 per cent whereas the growth in expenditure remained at almost 19 per cent. This growth in expenditure was mainly because of the ever-increasing salary, wages and pension bill of the state government, which is growing at 18.54 per cent on a year-on-year basis. Thus, the mismatch between what the state earned and what it spent continued to add to the state’s revenue deficit.
DA installment not paid
In practical terms, it meant that the state was unable to pay salaries to its over three lakh employees in time; the bills of employees and departments received by the treasuries were not cleared for months; and, the state was unable to give two DA (dearness allowance) installments to its employees.
Even the first DA installment given to employees was released partially. What added to the state government’s woes was the inability of the Union Government to release the Rs 680 crore that is pending with it as the CST (central sales tax).
Some positive signs in Nov
Towards the end of the year (November onwards), the state government’s fiscal health started showing signs of recovery. This is inspite of the fact that the state continued to dither on increasing VAT rate or on imposition of new taxes, for fear of alienating the urban voters from the Akali-BJP fold, especially with the General Election round the corner.
By this time, the government had finished most of its debt-serving, which eased the pressure on the state’s monthly income and expenditure mismatch. Growth in revenue, too, was witnessed after the government started realising property tax, and from composition fee charged for regularisation of illegal colonies —though this money went into the kitty of the Local Bodies Department and PUDA, respectively.
Festive season to rescue
With the festive season at its peak in November, the high sale of goods, especially consumer durables, in the state led to Punjab’s VAT collections increasing and showing a growth of 9 per cent, and the state’s non-tax revenue increasing by 20 per cent.
But inspite of these growth figures, Punjab will continue to be revenue-deficit this year, though this deficit is likely to be less (around Rs 3,500 crore) as compared to the revenue deficit of Rs 4,219 crore in 2012-13.
Fiscal indicators (April-Nov 2013)
Revenue receipts: Rs 22,250 cr
Expenditure: Rs 23,771 cr
Deficit: Rs 1,521 cr
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