All political parties promised freebies and subsidies to woo voters in financial crunch Punjab Ahead of the February 20 state assembly elections without indicating the possible sources of revenue required for this purpose. Ranjeet Singh Ghuman, eminent professor at Guru Nanak Dev University in Amritsar, tells TOI’s Sanjeev Verma that due to intellectual bankruptcy and policy paralysis, Punjab receives almost 97% of its total revenue receipts only for free and to meet existing financial commitments. will have to use. Public debt interest payments.
What will be the additional financial burden of free gifts or subsidies given by various political parties in their election manifestos in Punjab?
The Punjab government is already facing a severe financial crisis due to heavy debt burden, massive under-mobilization of financial resources, illogical development priorities and irrational and ill-targeted freebies and subsidies across the board. The plethora of election promises (including free electricity, old age pension and financial benefits to women) will only add to the crisis. Unfortunately, every political party is in a state of denial. Neither party gave a roadmap for raising additional financial resources (even with Rs 3 lakh crore debt and overdrafting and running the government by ways and means) and justification for promising the moon to the electorate. Here are some statistics to consider:
Lightning
There are 70,61,124 domestic electricity consumers in Punjab who are taking 1,506 crore units of electricity and paying Rs 9,584 crore in return. In addition to the existing subsidy of Rs 14,500 crore in FY 2022-23, the total additional financial burden of providing 300 units per month free of cost in FY 2022-23 would be around Rs 7,500 crore.
old age pension
The difference between the existing old age pension and the promised pension is Rs 2,350 per person per month. This will put an additional burden of Rs 4,631 crore on the exchequer over the existing Rs 1,399 crore.
financial aid to women
1,000 per month has been promised to all women above 18 years (numbering about 1.02 crore). The annual budget requirement will be Rs 12,241 crore.
The total amount of the above three items (new and existing) is Rs 40,271 crore. In addition, some other freebies or subsidies may add up to Rs 10,000 crore. Thus the total can be Rs 50,271 crore. As a proportion of the government’s total revenue receipts of Rs 68,995.90 crore (pre-actual) in the financial year 2020-21, it will be 72.86%. Adding this to the 20% interest payment on the existing public debt, about 97% of the revenue will be consumed by these two components. Neither political party states from where the government will meet other financial commitments. The irony is that no political party has given any roadmap to mobilize such a huge amount to be free and subsidized and to maintain it. What intellectual bankruptcy and policy paralysis!
What is the scope for raising additional financial resources?
According to official data, there was scope for an increase of Rs 16,012 crore in own tax revenue in the financial year 2020-21. As per my estimates, additional financial resources of Rs 38,500 crore can be raised annually without levying any additional tax or duty. The break-up is as follows: Rs 5,000 crore excise duty, Rs 9,000 crore GST, Rs 2,000 crore stamp and registration fee, Rs 3,000 crore from mining, Rs 3,000 crore property tax, Rs 1,500 crore professional tax, Rs 1,500 crore electricity from checking Rs 2500 crore from theft, transport and cable and Rs 1,000 crore to prevent theft in social schemes. Another Rs 10,000 crore could be added to this by rationalizing the tax regime and discretionary spending by the Chief Minister, Ministers and MLAs.
What is your opinion on the role of political parties in Punjab?
Sorry, no political party has promised to accelerate the growth rate of Gross State Domestic Product (GSDP) (which has been declining in Punjab since 1992, and below the national average and all major states) and increase the investment-GDP ratio not done. economic growth) which has been well below the national average. There is hardly any roadmap for development and no political will to change the orientation of the state from non-development to development. Employment generation is also not on the agenda in front of 25 lakh unemployed. Substance crisis, depleting water levels, crop diversification, youth migration to other countries, deteriorating governance, social concerns and environment are conspicuously missing from election manifestos.
The irony is that political leaders are committed to their individual development at the cost of the exchequer rather than the development of all. Instead of addressing the fundamental issues of Punjab, they are engaged in irrational competitive political populism and fooling, bribing and incapacitating the people of Punjab. Such irresponsible behavior of political parties is solely responsible for the downfall of Punjab. His 2022 election manifesto is no different.
In fact, the path chosen by the political parties is not a recipe for the revival of Punjab but a recipe for destruction. In such a hopeless scenario, the only ray of hope is to build strong and sustained social movements by the people and thereby bring about a systematic change. The political leadership must understand that poverty and the feeling of deprivation among the people is a threat to their political existence. The leadership needs to restore its lost trust and credibility, and practice people-centred politics, the sooner the better.
What will be the additional financial burden of free gifts or subsidies given by various political parties in their election manifestos in Punjab?
The Punjab government is already facing a severe financial crisis due to heavy debt burden, massive under-mobilization of financial resources, illogical development priorities and irrational and ill-targeted freebies and subsidies across the board. The plethora of election promises (including free electricity, old age pension and financial benefits to women) will only add to the crisis. Unfortunately, every political party is in a state of denial. Neither party gave a roadmap for raising additional financial resources (even with Rs 3 lakh crore debt and overdrafting and running the government by ways and means) and justification for promising the moon to the electorate. Here are some statistics to consider:
Lightning
There are 70,61,124 domestic electricity consumers in Punjab who are taking 1,506 crore units of electricity and paying Rs 9,584 crore in return. In addition to the existing subsidy of Rs 14,500 crore in FY 2022-23, the total additional financial burden of providing 300 units per month free of cost in FY 2022-23 would be around Rs 7,500 crore.
old age pension
The difference between the existing old age pension and the promised pension is Rs 2,350 per person per month. This will put an additional burden of Rs 4,631 crore on the exchequer over the existing Rs 1,399 crore.
financial aid to women
1,000 per month has been promised to all women above 18 years (numbering about 1.02 crore). The annual budget requirement will be Rs 12,241 crore.
The total amount of the above three items (new and existing) is Rs 40,271 crore. In addition, some other freebies or subsidies may add up to Rs 10,000 crore. Thus the total can be Rs 50,271 crore. As a proportion of the government’s total revenue receipts of Rs 68,995.90 crore (pre-actual) in the financial year 2020-21, it will be 72.86%. Adding this to the 20% interest payment on the existing public debt, about 97% of the revenue will be consumed by these two components. Neither political party states from where the government will meet other financial commitments. The irony is that no political party has given any roadmap to mobilize such a huge amount to be free and subsidized and to maintain it. What intellectual bankruptcy and policy paralysis!
What is the scope for raising additional financial resources?
According to official data, there was scope for an increase of Rs 16,012 crore in own tax revenue in the financial year 2020-21. As per my estimates, additional financial resources of Rs 38,500 crore can be raised annually without levying any additional tax or duty. The break-up is as follows: Rs 5,000 crore excise duty, Rs 9,000 crore GST, Rs 2,000 crore stamp and registration fee, Rs 3,000 crore from mining, Rs 3,000 crore property tax, Rs 1,500 crore professional tax, Rs 1,500 crore electricity from checking Rs 2500 crore from theft, transport and cable and Rs 1,000 crore to prevent theft in social schemes. Another Rs 10,000 crore could be added to this by rationalizing the tax regime and discretionary spending by the Chief Minister, Ministers and MLAs.
What is your opinion on the role of political parties in Punjab?
Sorry, no political party has promised to accelerate the growth rate of Gross State Domestic Product (GSDP) (which has been declining in Punjab since 1992, and below the national average and all major states) and increase the investment-GDP ratio not done. economic growth) which has been well below the national average. There is hardly any roadmap for development and no political will to change the orientation of the state from non-development to development. Employment generation is also not on the agenda in front of 25 lakh unemployed. Substance crisis, depleting water levels, crop diversification, youth migration to other countries, deteriorating governance, social concerns and environment are conspicuously missing from election manifestos.
The irony is that political leaders are committed to their individual development at the cost of the exchequer rather than the development of all. Instead of addressing the fundamental issues of Punjab, they are engaged in irrational competitive political populism and fooling, bribing and incapacitating the people of Punjab. Such irresponsible behavior of political parties is solely responsible for the downfall of Punjab. His 2022 election manifesto is no different.
In fact, the path chosen by the political parties is not a recipe for the revival of Punjab but a recipe for destruction. In such a hopeless scenario, the only ray of hope is to build strong and sustained social movements by the people and thereby bring about a systematic change. The political leadership must understand that poverty and the feeling of deprivation among the people is a threat to their political existence. The leadership needs to restore its lost trust and credibility, and practice people-centred politics, the sooner the better.