Cut down expenses, Centre tells Punjab

Friday, 04/05/2012

http://www.tribuneindia.com/2012/20120504/punjab.htm#3

Punjab, Kerala and West Bengal pressing for a fiscal package have been told by Union Finance Ministry officials to cut down expenditure and focus on revenue generation.

At a meeting yesterday, Punjab was directed to curtail its mounting burden of subsidies, including free power to the farm sector. Punjab’s power subsidy bill was about Rs 787 crore in 2003-04. It jumped to Rs 2,576 crore in 2006-07 and crossed Rs 3,800 crore in 2010-11. During the current fiscal year, it is likely to touch Rs 4500 crore, about 35 per cent of the total revenue generated under VAT.

Bedsides subsidy to farm sector, Punjab gives free power to poor sections. Punjab’s salary and pension bill has hit the roof. The state’s debt burden has risen to Rs 78,728 crore. Interest liability on debt for the last fiscal year was Rs 6,530 crore.

Sources said Punjab officials were told to take a decision to cap power subsidy as the Centre could lend a helping hand once or twice, but ultimately the state itself would have to manage its fiscal affairs.

The Centre questioned Punjab officials on poor utilisation of funds allocated to the state under various flagship programmes. For instance, only 50 per cent of funds allocated under the Urban Renewal Mission have been utilised till date. Likewise, there could have been greater utilisation of funds allocated under irrigation schemes. Also, as Punjab failed to implement certain reforms such as levying of property tax and raising water charges, it was unable to get its full entire share of funds under various central schemes.

As Punjab has not passed its Budget for the current fiscal year, its figures on revenue/fiscal deficit have not been formalised yet. The Union Finance Ministry has sought the final figures based on the Budget document from the state government.

The Centre has told the state that the next meeting on this issue would be held after the Punjab Budget is passed next month. The state’s projected revenue deficit for the current fiscal year is Rs 9,179 crore on the basis of the existing revenue resources. It will be about 3.35 per cent of the Gross State Domestic Product (GSDP).

Sources said Punjab, which has sought a waiver on small savings loan of Rs 22,000 crore and rescheduling of the remaining loan to reduce the principal and interest repayment burden, has pegged its hopes on West Bengal.

“In case the Centre gives relief to West Bengal, then Punjab will also get some relief. Otherwise, Punjab should not expect anything from the Centre”, said a senior official.