Promise of ‘achhe din’ with padded revenue estimates
CHANDIGARH: Having painted a gloomy picture of the state’s finances in his first budget accusing the Akalis of leaving a legacy of debt, finance minister Manpreet Singh Badal this time in his pre-poll budget declared ‘achhe din’ for the economy by talking about fiscal consolidation while committing more funds to fulfil his party’s poll promises.
But the turnaround, a study of budget figures reveals, comes with padded up revenue estimates. Sample this: In his budget speech, Manpreet pegged revenue from Goods and Service Tax (GST) to ₹17,109 crore against the revised estimates of ₹13,936 crore for thecurrent year (2018-19), a jump of 22.7% against assured payout of 14% by the Centre. Manpreet said as per the Comptroller and Auditor General (CAG)’S accounting procedure, GST compensation has to be accounted as grants-in-aid. But it has been apportioned in the ratio of 70:30 as state’s own tax revenue and grants-in-aid.
This means the 22% jump is from 70% of the GST revenue which would accrue to the state. The remaining 30% has been factored in as grants-in-aid, which too has been hiked to ₹18,039 crore in the budget estimate for next fiscal against revised estimates of ₹15,718 crore this year. Manpreet claimed the GST buoyancy will come from better tax efficiency even as its revenue collections this fiscal are way short of target.
While the minister finally agreed to allow ₹5 cut in value added tax (VAT) on petrol and ₹1 on diesel as a poll sop, he has not factored it in his budget estimates. Tax on fuel is the main source of the state’s VAT collection and the budget estimates for the next year peg it at nearly the same level as revised estimates of this year — at ₹6,353 crore.
Manpreet claimed it would come through higher sale of the fuel, a logic he refused to bite while refusing the VAT cut saying of Punjab’s fuel consumption, 80% is diesel and a rupee cut in its rate will translate to ₹400 crore loss annually.
Same goes for excise. The budget estimates of the last year had put excise collections at ₹6,000 crore but the state raked in only ₹5,462 crore, as per revised estimates for this year. This budget pegs it at ₹6,200 crore. How? Manpreet says the new excise policy will do the needful. Likewise, there is a huge difference in revised and budget estimates for stamps and registrations which were pegged at ₹2,500 crore last year, revised to ₹2,300 crore this year and have been pegged at ₹2,650 crore for the coming fiscal. Same goes for revenue from motor vehicles tax and electricity duty. Together, the higher estimates take the state’s own tax revenue to ₹78,509 crore — a jump of ₹8,000 crore from the revised estimates of ₹70,398 crore for the current year.
JUMP IN ‘LOAN RECOVERY’
The biggest jump in state’s revenue kitty is on account of recovery of loan (capital receipts). Against ₹743 crore in the revised estimates for this year, recovery of loans is pegged at ₹15,685 crore in the budget for coming fiscal after bonds issued underthe UDAY scheme have been taken over by the state as equity to relieve its power discoms. This alone contributes 13% to the state’s total receipts. The capital expenditure minus the UDAY effect
is 7% of the total expenditure and 18% including it.
Manpreet said the state has been set on the path of economic revival as the revenue deficit will be brought down to 2.02% and fiscal deficit to 3.4% in the coming fiscal. But this fiscal deficit is minus the impact of UDAY bonds and cash credit limit (CCL) being turned to long-term loan of ₹29,919 crore. Barring its impact, the fiscal deficit during 2016-17 when the Akalis went out of power, was even lower at 3%. Manpreet also did not explain how the unfunded gap has been brought down from ₹10,273 crore two years back to ₹2,323 crore.
Former finance minister Parminder Dhindsa said Manpreet has played a cruel joke with the people by misstating facts. “He has not kept funds for implementing the Pay Commission or dearness allowance (DA) arrears of employees. By projecting higher revenue and lower borrowings, he is claiming that the revenue deficit and fiscal deficit have been reined in.”
RATE CUT ON FUEL NOT FACTORED IN BUDGET, YET FM GIVES HIGHER PROJECTIONS ON VAT, EXCISE, STAMP DUTY, MOTOR VEHICLE TAX FOR NEXT FISCAL