Eight Key Takeaways From The Punjab Budget 2023-24

The Aam Aadmi Party (AAP) government in Punjab, under the leadership of Chief Minister Bhagwant Mann, presented its first complete budget earlier this month.

While the state’s finances have been a subject of debate amongst observers, given the mounting debt, there were concerns if the AAP government would continue its freebie schemes promised during the election campaign.

Presented by Punjab’s Finance Minister Harpal Singh Cheema, here are the eight key takeaways from the budget of 2023-24. 

Beating CAG Projections, State Accumulating Debt Faster 

In their report, tabled in the Punjab legislature a couple of days ahead of the budget, the Comptroller and Auditor General of India (CAG) had projected the state’s debt to rise to Rs 5 Lakh crore if the finances were not managed properly.

However, as per the new budget, the state debt will hit Rs 3.47 lakh crore by the end of the next financial year.

The effective outstanding debt-to-GSDP (gross state domestic product) ratio will breach 46 per cent, as per estimates, making it the  most 'indebted' states in India, ahead of most northeastern states, Kerala, Rajasthan and West Bengal. 

Deficits And More Deficits 

The budget estimates a revenue deficit of 3.52 per cent and a fiscal deficit of 4.98 per cent for the upcoming financial year. In the current financial year, the government was unable to meet its targets from the revenue receipts.

For the next fiscal, the government is targeting a revenue receipt target of around Rs 98,852 crore.

However, Punjab generated only Rs 93,563-odd crore against the original target of Rs 95,378 crore. Even the non-tax revenue target has been mixed. 

Big Promises, Big Holes 

The AAP made headlines, given the budget size was Rs 1.96 lakh crore. However, the state government is banking on borrowings (close to Rs 90,000 crore) to sponsor a larger part of its budget, further aggravating the debt crisis.

As per most experts, from within and outside the state, the government must look at avenues to increase the revenue from taxes, encourage more private sector enterprise in the state, and go easy on the expenditure pertaining to subsidies, especially in the power sector. 

AAP Accepts The Idea Behind Farm Laws, Quietly 

The farm laws, amongst several other economic consequences, would have resulted in the much-needed crop diversification in Punjab.

As of today, more than 85 per cent of the cultivated land in the state is devoted to paddy and wheat production, with the former being a water-intensive crop, resulting in significant soil degradation.

Quite like the previous governments, most recently under Captain Amarinder Singh, have allocated a cosmetic budget of Rs 1,000 crore to push for crop diversification. 

Freebies Missing, But Subsidies Continue Unabated 

During the campaign days, both Arvind Kejriwal and Mann went overboard with freebie promises. Free power upto 300 units, and a grant of Rs 1,000 was promised to every woman in the state.

However, the Finance Minister made no mention of these promises in the budget speech.

The power subsidy, which makes up for majority of the subsidies in the state, has been increased to Rs 9,331 crore from Rs 9,064 crore in the last budget. Without diving into specifics, Cheema also spoke on a crop insurance programme in the works.

More Foreign Trips Promised For Teachers 

Governor Banwarilal Purohit, in a recent letter to the Chief Minister, questioned the idea of sending teachers to Singapore for training. Mann, however, responded saying that the government was not answerable.

In the budget speech, the Finance Minister announced that they would be continuing with the programme, setting aside Rs 20 crore for the same.

Ironically, during Kejriwal’s rally in Himachal Pradesh, ahead of the state elections, teachers from Punjab clashed with AAP workers on the issue of unfulfilled promises. 

Ayushman Bharat Clinics Claimed As AAP Clinics, Again

The government stated that against the original target of 117 Mohalla Clincs, they had delivered 504. The catch here is that the state government was rebranding Ayushman Bharat Clinics, as pointed out by the Centre.

Consequently, the next installment worth Rs 546 crore under the National Health Mission may not be given to the state, as per a letter addressed by the additional secretary, Health and Family Welfare recently.

Of the 3,000 health wellness centres in the state, 400 have already been converted and branded into AAP clinics.

Crowdfunding Through Punjab Sikhya-Te-Sehat Fund

Focussed towards NRIs in Canada and other parts of the world, the state government is in the process of setting up a fund, subject to the approval of the Centre, where people can contribute money for the development of education and healthcare in Punjab.

Alarmingly, the idea is quite similar to what a few economists from Punjabi University, Patiala, recently suggestion; to crowdfund money from generous Sikhs across the world to lower the state’s debt.

However, given the legalities, the fund would not see the light of the day, probably.