Punjab’s Fiscal crisis due to falling GDP growth over 30 years: Expert

Punjab Economy

08-Feb-21

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“Punjab’s financial crisis may be attributed to the deceleration of Gross State Domestic Product (GSDP) for over 30 years, under mobilisation of resources, misplaced development priorities and the shifting of successive governments’ orientation from growth to just maintaining law and order and meeting other committed liabilities,” says Dr RS Ghuman, an eminent economist.
These observations were made by Dr Ghuman during an exercise on mobilising additional resources in the state for the 6th Punjab Finance Commission headed by former Chief Secretary KR Lakhanpal. In the report submitted to the commission recently, Dr Ghuman pointed out that there was a dire need to address the issue both from revenue generation and expenditure side.
The report says the state has the potential to raise its revenue receipts by Rs 15,000-Rs 18,000 crore per annum. So far, during the ongoing financial year, Punjab’s total receipts are just 54.8% of its budget estimates (Rs 48,251. 59 crores against the target of Rs 88,004.31 crore).
It has been pointed out that the excise collections can go up by Rs 4,000-Rs 4,500 crore — an increase of 65 to 70% — by checking pilferage and evasion of the duty imposed on the sale of liquor. The fact has also been established this year, as strict enforcement in liquor business has seen the state make up for the revenue shortfall it would have faced considering the two-and-a-half months of the lockdown period.
Punjab has already managed to earn Rs 4,800 crore as excise collections till January 2021. The study has also pointed out that there was large-scale evasion of the Goods and Services Tax amounting to almost 50-60%.