Punjab's fiscal health "poorer" than Haryana's

Punjab may have been trying "hard" to bring fiscal discipline but when its fiscal health is compared with that of Haryana, the neighbouring state is found to be performing better.

On the most of fiscal parameters, including revenue, fiscal deficit, tax mobilisation and debt, Haryana's fiscal situation is better than that of Punjab, as per budget documents of both the states.Where Punjab is "struggling hard" to bring down its "rising" revenue deficit (difference between revenue receipts and revenue expenditure), Haryana's revenue deficit has been well below one per cent of GSDP since 2011-12.

Punjabs revenue deficit to GSDP ratio was 2.63% for 2011-12 against the target 1.8 % as per Fiscal Responsibility and Budget Management Act, 2011. In 2010-11, its revenue deficit was 2.35 % of GSDP.Although it has now set an ambitious target of achieving revenue deficit of 0.57 % of GSDP for 2013-14.

    

Notably, Haryana has consistently followed the targets set out in FRBM Act 2005 and remained a revenue surplus state for a period starting from 2005-06 till 2007-08. Punjab in last twelve years had never been able to turn into a revenue surplus state.
     
Punjab's fiscal deficit as percentage of GSDP is projected to come down from 3.28 % in year 2011-12 to 3.17 % in 2012-13 and then 3 per cent (Budget Estimates) in 2013-14.

On the contrary, Haryana's ratio of fiscal deficit to GSDP is proposed at 2.2 % (BE) in 2013-14, dipping from 2.3 % in 2011-12.

The Punjab government had already admitted that if the state failed to meet targets of revenue deficits, fiscal deficit and debt to GSDP ratio, then it would be losing Rs 500 crore every year from the Centre.

Punjab, which has been facing severe criticism for spiraling borrowings to meet its expenditure, has proposed its debt to grow to Rs 95,670 crore (without reserve funds) for 2013-14 in the budget which was presented by Finance Minister Parminder Singh Dhindsa on March 20.

Punjab's outstanding debt without reserve funds had shotup from Rs 52,923 crore in 2007-08 to Rs 95,670 crore in (BE) 2013-14, as per budget documents.But Haryana's debt liability is expected at Rs 67,772 crore in 2013-14, much below than that of Punjab.Punjab's debt to GSDP ratio is projected at 30.99 % whereas in case of Haryana, this ratio is much lower at 16.47 per cent (BE) for 2013-14.

    
Government auditor CAG in its latest report has asked Punjab government to utilise debt receipts for asset creation as state was utilising major portion of borrowings for repayments of its past debt.Punjab government has been "harping on" quantum jump in its Value Added Tax (VAT) revenue to Rs 17,760 crore (BE) in 2013-14 from Rs 5,342 crore in 2007-08 because of tax compliance ever since it took over reigns of the state.

But Haryana is enjoying buoyancy in its VAT revenue growth despite slowdown in economy as it has projected its VAT revenue up from Rs 16,450 crore in 2013-13 to Rs 19,288.61 crore in 2013-14. Even the annual plan of Haryana is bigger than that of Punjab with former proposing an outlay of Rs 18,000 crore for 2013-14 against Rs 16,123 crore proposed by Punjab for next fiscal.

    
Even as Punjab government has committed to bring down the non-development expenditure, its salary, wages and pension are projected to "swallow" about 48 % of revenue receipts in 2013-14. In case of Haryana, this bill is proposed to dip from 38.68 % in 2011-12 to 37.94 % of revenue receipts in 2013-14.
    
Punjab's per capita income (PCI) is also lower than that of Haryana as state's PCI at constant prices is Rs 48,496 as against neighbouring state's at Rs 66,410 for 2012-13.