Math of the budget: Show me where is the money

WHOPPING DEBT Already facing an unprecedented debt, government is likely to raise more loans, committing in advance for next 10 years its sources of income to service these

CHANDIGARH: Money makes the mare go. At a time the revenue targets of the state are going awry, Punjab finance minister Parminder Singh Dhindsa’s “sarbat da bhala” budget will have the state scraping the bottom of the barrel to fund the plethora of doles and schemes he announced on Tuesday.

Eying elections early next year, Dhindsa, however, couldn’t care less and is expected to resort to the familiar “borrow-and-blow” approach to push the populist agenda. Already facing an unprecedented debt of ` 1.25 lakh crore, the state government is likely to raise more loans, committing in advance for the next 10 years its various sources of income to service these. The projected debt burden of the state for the next fiscal is ` 1.38 lakh crore and the interest liability is going to cross ` 10,000 crore.

While the public debt raised in 2014- 15 was almost ` 12,000 crore, another ` 14,500 crore has been borrowed this year and the budget’s projected borrowing for the next fiscal is almost ` 16,000 crore, most of which is going to be raised from the market. What’s worse is that the state’s own tax revenue has taken a beating. Revised estimates for the current year show a downfall of almost ` 850 crore in VAT (value-added tax) collection. The state has, as a result, limited itself to a projection of about ` 30,500 crore as its total tax-revenue next year, which is barely ` 1200 crore more than the budget estimates for the current year.

The good news is that the shortfall in the state’s own taxes has been overridden by the increase in the share of central taxes from ` 4,700 crore in 201415 to more than ` 8,000 crore this year; and it is estimated to be ` 9,000 crore next year. The grants-in-aid from the Centre, which fell by almost ` 900 crore this year from ` 5,900 crore last year, is expected to be at least ` 6,900 crore next year, a new high.

On the expenditure side, the state’s non-productive revenue spending, which includes Punjab’s fat salary bill projected to touch ` 20,000 crore next year, is ` 18,000 crore this year, with an additional ` 7,000 crore for pension and retirement benefits. The FM is in the end left with a projected capital outlay of ` 4,800 crore to play around with next year, almost the same as he was to spend this year (but was later reduced to ` 4,300 crore).

CESSES TO COVER IT: SUKHBIR

Other than what is routed through the consolidated fund, Punjab spends another at least ` 5,000-to-8,000 crore earned by the boards and corporations on infrastructure development. “The earning of these boards is through education, culture, and infrastructure-development cesses. That money will be go into building skill-development centres, medicine shops, gymnasiums, hostels, etc.,” said deputy chief minister Sukhbir Singh Badal, when asked where the money will come from to pay for the sops announced on Tuesday.

BORROWING WITHOUT MORTGAGING? HOW?

The largest announcement made in the budget is an expenditure of more than ` 8,000 crore on revamping the rural (`2,000 crore) and urban (`6,083 crore) infrastructure. Punjab Infrastructure Development Board (PIDB) is expected to raise a large part of the money (`5,000 crore) through loans, “though no properties are going to be mortgaged”, as the deputy CM has clarified. “The cess on petrol, diesel, and electricity, which amounts to an earning of ` 1,000 crore a year, will be used to service the loan. The Punjab government will stand guarantee for the loans collected by the PIDB,” said board’s managing director A Venuprasad.

For the urban mission, a part the money is expected to be allocated under the 14th finance commission for the urban local bodies and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), an Indian government scheme.

Another ` 500 crore is to be spent on the youth, through either skill development or sport. The project of building 4,000 gymnasiums in villages (for ` 200 crore) is a state initiative and as special provision in the budget. “Other than a small building, the major expenditure will be the equipment,” said sports secretary Vivek Pratap.

BANKING ON CENTRE

The state will also bank heavily on enhanced grants from the Centre, straight-jacketing some of its announcements made on Tuesday to fall within the purview of central schemes. The fund allocation under the 14th finance commission is also expected to pay for some of the doles announced. Corporate sponsorship will pay for a part of the Swasth Kanya Yojana among other welfare schemes.