The AAP government’s freebies push in Punjab will have the state, which already is one of the most fiscally stressed states, missing the fiscal targets by a wide margin yet again this fiscal, shows an analysis. According to an India Ratings’ analysis of the Punjab budget for FY24, the Bhagwant Mann government will likely close the year with a fiscal deficit of Rs 33,216 crore which is a whopping 5.3 per cent of GSDP or gross state domestic product from the budgeted Rs 23,835 crore or 3.8 per per cent in FY24.
This comes on top of the state closing the previous year with a 5 per cent fiscal deficit.
The Centre allows a state to borrow annually only 3 per cent of its GSDP and an additional 50 bps more on meeting certain reforms in the power distribution and public transport sectors.
Punjab’s fiscal stress will continue even in the medium-term and will remain one of the fiscally most stressed states, says Sunil Kumar Sinha, the senior director at the agency.
This is because the state’s fiscal plan for FY25-26 assumes 10 per cent nominal GSDP growth because the assumptions of own tax revenue growth of 15 per cent each in FY25 and FY26 also look optimistic. On the other hand, revenue expenditure growth assumptions appear to be conservative as the same is assume
to grow at 5.5 per cent in FY25 and 8.6 per cent in FY26, while its average revenue expenditure growth during FY18-22 was 12 per cent.
He further notes that the revenue deficit is expected to be around 4 per cent of GSDP, which will be 50 bps higher than the budgeted, primarily due to the optimistic assumption on revenue receipts and nominal GSDP growth.
According to the revised estimate, the state’s revenue deficit in FY23 came in at Rs 23,891 crore or 3.7 per cent of GSDP) almost double of the FY23 budget estimate of Rs 12,554 crore or 2 per cent as slippage in revenue receipt was Rs 1,815 crore. This was in spite of doing reasonably well on the tax revenue front.
Although its own tax revenue was lower by Rs 1,448 crore than budgeted, its share in Central taxes was higher by Rs 2,407 crore. The slippage mainly came from the lower non-t ..
Read more at:
https://economictimes.indiatimes.com/new
