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There are no fresh taxes or increase in existing tax rates in the state Budget, presented by Punjab Finance Minister Parminder Singh Dhindsa on Wednesday.
He said reducing the revenue deficit is a big challenge. Adding, this could be taken care of by the increased devolution of taxes from the Centre. The state is expecting around Rs 2,500 crore more on account of increased state’s share in central taxes.
Addressing the state Assembly, Dhindsa said revenue shortfall will have to be fixed, especially in the wake of the implementation of the 5th Punjab Pay Commission recommendations, which entail a significant increase in the state’s expenditure on salaries and pensions.
“Due to sustained efforts of the government, tax revenue to GSDP (gross state domestic product) ratio and non-tax revenues have increased in the recent years. However, the declining share of Punjab in Central taxes had constrained the overall resource position of the state. This situation, though, is set to take a better turn now with the 14th Finance Commission recommendations, which have resulted in increased devolution albeit at the cost of reduced Plan allocation,” he said.
Talking to Business Standard on the sidelines of Assembly session, Dhindsa said: "The deficit will be narrowed with the 14th Finance Commission recommendations. We expect to get Rs 2,500 crore more on account of increased devolution."
The revenue deficit for 2013-14 was Rs 6,537.14 crore or 2.06 per cent of GSDP. For 2015-16 (Budget estimates), it is projected at Rs 6,240.38 crore or 1.78 per cent of GSDP. The state expects a nominal increase in state taxes from Rs 28,60.57 crore (revised estimates) in 2014-15 to Rs 29,351.93 crore (Budget estimates) in 2015-16.
On the focus of the current Budget, he added, "We have laid down the steps to steer the state towards the course of fiscal consolidation and focus on Plan performance."
He added the state government's efforts have enabled it to keep the debt within manageable limits as is reflected in the rapid decline in debt to GSDP ratio. In 2014-15, the outstanding debt to GSDP ratio is pegged at 32.27 per cent against the target of 38.7 per cent set by 13th Finance Commission for 2014-15. During 2015-16, the outstanding debt to GSDP ratio of the state is projected to be 31.34 per cent of GSDP (Rs 1,24,471.38 crore).
He added: "There has been a significant improvement in the size of the approved Annual Plan of the state and its implementation since 2006-07. The approved annual Plan during 2006-07 was Rs 4,000 crore, which increased to Rs 20,100 crore in 2014-15."
The implementation of Annual Plan was 65 per cent during 2011-12; 72 per cent during 2012-13; and 73 per cent during 2013-14. The likely financial achievement in 2014-15 is 80 per cent. The size of the Plan is Rs 21,174 crore for 2015-16 with an increase of five per cent over the previous year's Plan."
