NEW DELHI: Indian Punjab Finance Minister, Parminder Singh Dhindsa, proposed that no further hike in tax despite 2.06 percent deficit.
According to him, this could be taken care of by the increased devolution of taxes from the Center. The state is expecting around Rs 2,500 crore more on account of increased state’s share in Central taxes. In his speech, he said reducing the revenue deficit is a big challenge.
Addressing the state Assembly, Dhindsa said revenue shortfall will have to fixed, especially in the wake of the implementation of the 5th Punjab Pay Commission recommendations, which entail a significant increase in the state’s expenditure on salaries and pensions.
“Due to sustained efforts of the government, tax revenue to GSDP (gross state domestic product) ratio and non-tax revenues have increased in the recent years. However, the declining share of Punjab in Central taxes had constrained the overall resource position of the state. This situation, though, is set to take a better turn now with the 14th Finance Commission recommendations, which have resulted in increased devolution albeit at the cost of reduced Plan allocation,” he said.
Talking to Business Standard on the sidelines of Assembly session, Dhindsa said: “The deficit will be narrowed with the 14th Finance Commission recommendations. We expect to get Rs 2,500 crore more on account of increased devolution.”
The revenue deficit for 2013-14 was Rs 6,537.14 crore or 2.06 per cent of GSDP. For 2015-16 (Budget estimates), it is projected at Rs 6,240.38 crore or 1.78 per cent of GSDP. The state expects a nominal increase in state taxes from Rs 28,60.57 crore (revised estimates) in 2014-15 to Rs 29,351.93 crore (Budget estimates) in 2015-16.
On the focus of the current Budget, he added, “We have laid down the steps to steer the state towards the course of fiscal consolidation and focus on Plan performance.”