As a result, state government is not clearing any advances sought by its employees from the provident fund (unless it is for marriage, education or health needs); medical bills have not been cleared for almost a fortnight; arrears of employees and retirement benefits have not been released. Though the salaries of most employees have been cleared, sources said that the salary of some government aided school teachers and grant in aid released to certain corporations have also been held back.
Deputy Chief Minister Sukhbir Singh Badal, however, says that there is no fiscal crisis. “June-August is generally a lean period and revenue mobilisation is slow. This year, the VAT collection from the agriculture sector, too, went down by Rs 70 core, because of the fall in wheat production and its procurement by government agencies. However, the economic sentiment always improves from September onwards, and we are expecting that all pending bills will be cleared soon,” he said, adding that besides VAT collections, excise collections also pick up in September. The monthly salary and pension and retirement benefits bill of the state is Rs 1,681 crore.
The state has also been raising capital from the market fast, so as to meet its growing expenditure needs. However, this year, the central government has revised and lowered the limit of loans that state governments can raise from the market. Till last fiscal, states were allowed to raise 3.5 per cent of its total Gross State Domestic Product (GSDP), while this time, the borrowing limit has been reduced to just three percent of GSDP this year. As a result, as against Rs 9,900 crore that the state could raise last year, this year the state can raise just Rs 9,200 crore by selling its state development loans.
Also, because of the economic slowdown, the state’s revenue is not growing at a pace as was targeted by the government. The VAT collections in the first quarter have grown by just 12 per cent, as against a target of 25 percent, while the revenue from stamp duty and registeration of land has grown by just eight percent, as against a target of 16 per cent.
With the lowering of the state’s borrowing limit and a slow growth in the revenue receipts, the government is facing a tough time in meeting its expenditure. Sources in the Finance Department told The Tribune that as against an average income of Rs 3,300 crore, the state spends Rs 3,800 crore-almost Rs 500 crore more than what it earns in a month.
Deputy Chief Minister Badal, however, says that they were now trying to bridge the gap in revenue expenditure and receipts. “We will be mopping up our revenue by getting more people under the VAT net, plugging loopholes in our VAT collection and charging fees for regularisation of illegal colonies. By the end of this month, we will be in a much better position and no bills will be pending with the government,” he said.
Dismal figures
- Against an average income of Rs 3,300 crore, the state spends Rs 3,800 crore a month
- The amount of funds the states can borrow from the market has already been lowered from 3.5% to 3% of the GSDP
- The state can thus raise only Rs 9,200 crore this year instead of Rs 9,900 crore it raised last year
- The state's revenue is not growing as targeted by the govt
- The VAT collections in the first quarter have grown by just 12 per cent, as against a target of 25 percent
