It is a sort of double jeopardy for the Finance Minister in the Punjab Cabinet. On the one hand, he is expected to ensure that the state balance sheet remains in the black, and on the other, he is being asked to provide money for the never-ending, politically expedient subsidies announced by the Chief Minister.In the earlier Akali Government, the state was on the precipice of a financial disaster. The situation improved under the Congress mainly due to the implementation of Value Added Tax (VAT) and higher stamp duty receipts. When the Akali-BJP combine won the Assembly elections earlier this year, its leaders were conscious of the fears of fiscal profligacy.The new Government did its utmost to dispel the fear and one major step towards this was the appointment of Manpreet Badal as the Finance Minister. A London-trained barrister in his 40s, Badal had the reputation of being a modern and forward-looking leader. But today, even he feels overwhelmed by the sheer hopelessness of Punjab’s finances. To his credit, he tried to enhance tax collections through better implementation and surveillance, but even he knew that all this is of little consequence in the presence of a plethora of subsidies. Speaking to The Indian Express, an unhappy Badal said: “It’s unfortunate but true. Instead of focusing on the economy, our politics largely revolves around Shromani Gurudwara Prabandhak Committee (SGPC), Deras and martyrs.”Numbers tell a sordid tale about Punjab’s economy. The electricity subsidy (free power to farmers) is costing the Government around Rs 3,200 crore every year. Moreover, a new scheme under which the state Government is providing free wheat and pulses to the poor is expected to cost another Rs 850 crore annually. Gross fiscal deficit of the state stands at a mammoth Rs 5,566.50 crore. Close to 76 per cent of the revenue receipts of the state are spent in meeting expenditures of salaries, pensions and interests. The debt, as a percentage of GSDP, is at 41.13 per cent. This condition is further exacerbated by the overall sluggishness in the state economy. As per the Planning Commission, in the 11th Five-Year Plan (2007-12), Punjab will be among the least growing states in the country. The state’s GDP growth rate of 5 per cent stands nowhere in comparison to the 14 per cent growth rate of neighbouring Haryana. “The consumption patterns in Haryana are no different from Punjab, but its VAT collections are far ahead of us. It’s a clear case of tax evasion in Punjab,” the Finance Minister maintained. Pushed to the wall, the state is now thinking of various plans for additional resource mobilisation. Besides, there is a genuine debate about subsidies in the Cabinet. Whether this debate will lead to any improvement in the condition or not remains to be seen.
