The Akali Dal-BJP government in Punjab on Tuesday presented the 2016-17 budget with sops for industry and agriculture. No new taxes were announced.
Parminder Singh Dhindsa, Punjab finance minister, announced a value-added tax (VAT) relief from 6.05 per cent to 3.63 per cent to the spinning sector. Punjab has close to 165 spinning mills with 4.25 million active spindles with a consumption capacity of 6.5 million to 7 million bales annually. This reduction in VAT will help Punjab's spinning sector compete in the national market.
The finance minister also proposed to set up a high-tech cycle valley in Ludhiana with a state-of-the-art common facility centre on 300 acres. Ludhiana has the largest cluster of cycle factories in the country. More than 90 per cent of the country's demand for cycles is met from here. The budget proposes to rejuvenate the sector dominated by micro, small and medium units.
The total budget size for 2016-17 was Rs 86,387 cr, including Rs 19,500 cr towards ways and means transactions.
Dhindsa informed the Assembly that the revival of real estate was also a priority area and it would boost demand on many fronts. The budget has proposed to slash the collector rates used for assessing stamp duty all over the state by 15 per cent. Dhindsa also proposed a rebate of 25 per cent on change of land use (CLU), external development charges (EDC) and licence fee on all new housing projects. A higher rebate of 50 per cent on CLU, EDC and licence fee was proposed for affordable housing projects.
Among major announcements for the farming sector, the budget proposed interest-free loans of Rs 50,000 an acre to farmers with landholding of less than five acres. Small farmers have been paying four per cent interest on a loan of Rs 50,000 under the current schemes. Tax exemptions for agriculture-allied activities like bee farming and pig feed have also been incorporated in the budget.
The minister informed the media that the tax concessions would entail an annual extra burden of Rs 1,200 cr on the state exchequer. He added that a 7 per cent increase in the state's own tax revenue and 13-14 per cent increase in the devolution of funds from the Centre would help meet the increased expenditure. He did not explain about the additional resource mobilisation of the government. The accumulated debt of Punjab in 2015-16 was pegged at Rs 1,24,553 cr and was projected to be revised at Rs 1,30,000 cr in 2016-17, Dhindsa said.
The state is in election mode as Assembly polls are expected to be held in January or February 2017.
