The Punjab government has proposed an expansionary budget focused on infrastructure, according to a June 27 budget speech.

The state’s proposed budget for 2022-23 stands at Rs 1.56 lakh crore, a 14.2% increase from the previous fiscal. The state’s fiscal year deficit is 3.78% of state GDP, while its effective outstanding debt to the GSDP is estimated at 45.23%.

“Today, we are at a turning point where fiscal wisdom calls for generating surplus revenue, especially when GST compensation ends on June 30,” Finance Minister Harpal Singh Cheema said in his budget speech.

To get states to join the GST system, the centre has pledged to increase revenue by 14% through a special levy. So-called GST compensation to states will cease from June 30, hitting state finances under unprecedented pressure due to the Covid-19 pandemic.

Punjab’s revenue expenditure was Rs 1.08 lakh, up 5.35% year-on-year, while capital expenditure was Rs 10,981 crore, up 8.95% year-on-year.

The government will continue to provide free electricity to the agricultural sector with an allocation of Rs 6,947 crore this financial year.

Meanwhile, the state infrastructure department has allocated Rs 23,498 crore, according to the budget speech.
Revenue for FY 2022-23 stood at Rs 95,378 crore, up 17.08% from the previous financial year.

The Treasure said the state has a revenue roadmap for priority sectors to meet spending targets for this year and has taken steps to increase revenue.

The minister said the new GST policy in Punjab would be a game-changer as it will break the monopoly and oligopoly that has been formed in the industry over the years. The government wants to boost GST revenue to Rs 9,648 crore, up 56% from the previous fiscal.

He added that the state is also working to close the loophole in GST collection and expects GST collection to grow by about 27% in 2022-23, which will add about Rs 4,350 crore to the state’s kittens.

The minister said the Punjab government is also looking to increase non-tax revenue, estimating the centre’s share of central tax revenue and grants at Rs 14,757 crore and Rs 28,731 crore, respectively.