AAP walks a tightrope for its maiden Punjab budget

Chandigarh: In its maiden budget for 2022-23, the Aam Aadmi Party (AAP) government faces the challenge of finding ways for resource mobilisation to spell out its priorities for the state while incorporating some of the populist pre-poll promises and yet sticking to its assurance on not imposing any new taxes.
Where the government is pinning its hopes on the recently-announced excise policy and the forthcoming mining policy, experts suggest some hard decisions like putting plans to offer freebies on hold and taking out-of-the-box initiatives to generate funds while bringing efficiency in tax collection.

Prof Satish Verma, RBI chair at Centre for Research in Rural and Industrial Development (CRRID), said the AAP government should be open to taking non-populist initiatives like imposing user charges. He added that absolute freebies would only result in heartburn among the non-beneficiaries and also lead to misuse of resources. “For instance, the Chandigarh model of fining people for washing their cars can be replicated. Punjab can also generate income by imposing user charge on cars being parked on public land on a daily basis,” he said.
A former Punjab bureaucrat added, “The previous Congress government grappled with fund allocation for its promises of farm debt waiver and smartphones for students and eventually the schemes had to be tweaked. AAP faces a similar uphill task with its twin promise of Rs 1,000 per month to every woman above 18 years of age, which will cost the exchequer over Rs 12,000 crore per year, besides 300 units of free power. The state prepared its excise policy under the shadow of slashing of prices in neighbouring states of Punjab and Chandigarh to check smuggling and it remains to be seen if lower prices will bring in more excise revenue.”
Punjab finance minister Harpal Singh Cheema has identified education, health, rural development and industry as some of the thrust areas for the budget.
Meanwhile, according to the revised estimates for 2020-21, 23% of the expenditure was on account of salaries and wages, followed by 16% for interest payment and 12% for repayment of public debt. There were also other revenue expenditures to the tune of 31% while the capital expenditure was 6%.
Almost 40% of the total revenue receipts was by way of grant in aid, while state’s own tax revenue was 39%, share in central taxes was 13% and the state’s own non-tax revenue was 8%.