Punjab in trouble as central grants down 61%, deficit up

Punjab in trouble as central grants down 61%, deficit up
Chandigarh: With the grants-in-aid and contributions from the Centre to cash-strapped Punjab down by almost 61 per cent over last year, the state’s revenue deficit has zoomed like never before.

As the fiscal indicators for the first half of the year indicate, the grants-in-aid and contributions from the Centre this year is just Rs 4,726.60 crore as compared to Rs 12,055.23 crore last year. The state’s total revenue receipts between April and September have dwindled from Rs 39,881.21 crore in 2022 to Rs 38,230.17 crore in the corresponding period of this year.

As a result, the state has had to resort to market borrowings to meet its liabilities. In the first six months of the ongoing fiscal, the state government has borrowed Rs 20,446.07 crore, as compared to Rs 11,464.98 crore raised as loans during the corresponding period of 2022-23.

In spite of this, the revenue deficit in the first half of the fiscal has zoomed from Rs 11,464.98 crore in 2022 to Rs 18,938.11 crore in the ongoing fiscal.

A perusal of the fiscal indicators for the first half of 2023-24 also reveals that the state’s non-tax revenue is much less than the target set for this year. As compared to a target of collecting Rs 7,823.99 crore, only 29.16 per cent (Rs 2,282.17 crore) has been collected between April to September this year. In the first six months of last year, 35.57 per cent of the targeted non-tax revenue had been collected by the government.

The government thus has very little money to spend on creation/maintenance of infrastructure. The capital expenditure made by the government is just Rs 1,481.93 crore as compared to a capex of Rs 1,898.36 crore in the first six months of last year.

The good thing, however, is that in spite of resource crunch, the state government has managed to hedge Rs 7,738 crore since April 2022 by creating a sinking fund. Also, the state has released a much higher subsidy this year — Rs 10,751.95 crore — as compared to Rs 7,568.20 crore last year.