Punjab Budget 2013: Soft drinks, cigarettes to cost more

Soft drinks and cigarettes will cost more in Punjab effective April 1, with the state government hiking the Value Added Tax (VAT) in the Rs 460.21 crore deficit budget presented in the state assembly here on Wednesday.

Chandigarh: Soft drinks and cigarettes will cost more in Punjab effective April 1, with the state government hiking the Value Added Tax (VAT) in the Rs 460.21 crore deficit budget presented in the state assembly here on Wednesday.

Finance Minister Parminder Singh Dhindsa presented the budget for 2013-14 even as the opposition Congress members abstained from the House for the sixth successive day, holding a "mock session" outside the Assembly complex to protest suspension of their nine members last week.

Dhindsa proposed to abolish 5.5 percent VAT on items used by children, senior citizens and the poor. The children items include school bags, pencils, erasers, sharpeners, geometry box, colours and crayons, water bottle, feeding bottles and nipples.

Those for senior citizens include hearing aids, intra ocular lens, sticks and other walking support items for the senior citizens, while the items of poor exempted from VAT include Madhani (Lassi maker), Lemon squeezer, roller and rolling pins (chakla belan), mat, brooms, pawa (used in cots), comb, hairpin and hair clippers.

In order to mop up Rs 180 crore during the financial year, Dhindsa proposed to hike VAT on cigarettes by 144 percent, hiking it from 22.55 percent to 55 percent, including a 10 percent surcharge. This will yield the state Rs 100 crore annually, Dhindsa said.

The VAT on soft drinks has been hiked from 13 per cent to 20.5 per cent which will get the state Rs 80 crore per annum.

Dhindsa said that the total budget for 2013-14 would be of Rs 69,051.78 crore and the financial year would commence with a deficit of Rs 420.25 crore, a deficit of Rs 460.21 crore.

The Annual Plan for next year has been fixed at Rs 16,123 crore against Rs 14,000 crore in previous year- an increase of 15 percent.

The plan focuses on development of infrastructure in power, roads, rural water supply and sanitation, health and education, Dhindsa added.

The Finance Minister also announced a Voluntary Compliance Scheme for VAT and Excise duty for the coming year. "This would help in recovery of large amount of arrears that are due to the government," he said adding the details would be announced soon by the Excise and Taxation Department.

He also declared restoration of the LTC facility for government employees from April 1. The facility was suspended last year.

Dhindsa said the state has been successful in containing fiscal deficit within targets laid down by the 13th Finance Commission.

"The Fiscal Deficit of the state for 2011-12 was Rs 8,491 crore which was 3.28 percent of the GSDP against the target of 3.50 percent laid down by the 13th Finance Commission," he added.

He said the fiscal deficit of the state for 2013-14 at Rs 9,258 crore is 3 percent of the GSDP as against the target of 3 percent given by the 13th Finance Commission, which is much less as compared to the fiscal deficit of Government of India for 2013-14 at Rs 5,42,499 crore.

Dhindsa said the state has managed to keep its fiscal deficit to GSDP ratio within the limit of 3.5 percent up to 2012-13 and there would be no problem in limiting it to 3 percent during 2013-14.

The average fiscal deficit, which as percentage of GSDP was 4.18 percent during the 10th plan (2002-03 to 2006-07) has come down to 3.28 percent during the 11th plan (2007-08 to 2011-12), he added.

He said that the revenue deficit of the state for FY 2013-14 at Rs 1,747 crore is 0.57 percent of GSDP against the target of 0.6 percent set by the 13th Finance Commission. "This is the lowest ever target given to the state," Dhindsa said.

"The target given to the state for the 12th plan period is 6.4 percent. We have sought support of the Centre in a big way for diversification of agriculture and promotion of industry. We will endeavour to achieve the target given to the state," he said.

Dhindsa said that GSDP of the state is expected to increase from Rs 2,59,223 crore in 2011-12 to Rs 2,96,007 in 2012-13 at current prices, showing a growth rate of 14.19 percent.

"The state GSDP as a percentage of National GDP increased from 3.10 percent in 2012-13 to 3.13 percent in 2012-13 as against our share of 2.29 percent in the country's population as per census 2011," he said.

The Finance Minister said at current prices the per capita income increased from Rs 78,594 in 2011-12 to Rs 89,345 in 2012-13, showing an increase of 13.68 percent against the national increase in per capita income of 11.67 percent.

He said the state has been successful in meeting the targets of fiscal deficit and debt to GSDP ratio.

"However, it is finding it difficult to adhere to revenue deficit targets laid down in the fiscal consolidation path," Dhindsa said.

He said the major objectives of the fiscal consolidation path include eliminating revenue deficit, contain fiscal deficit to 3 percent of GSDP and cap outstanding debt of the state at 38.7 percent of GSDP by financial year 2014-15.

He said the problem of outstanding is not unique to Punjab, which was a revenue surplus state till mid 1980s. "Problems of militancy, tax concessions to neighbouring states, inadequate support from the Centre and the rising and unwavering commitment of the state to welfare of poor have contributed to increase in debt of the state.

Stating that the outstanding debt has been declining over the years, Dhindsa said the average debt of GSDP which was 44.04 percent during the 10th Plan declined to 32.11 percent in the 11th Plan.

He said during 2012-13, the outstanding debt is likely to increase to Rs 92,804 crore (31.35 percent of GSDP) with reserve funds and Rs 86,453 crore.

"For the year 2013-14, the state plans to borrow Rs 9,261 crore and the outstanding debt by the end of the year would be about Rs 1,02,282 crore (33.13 percent with reserve funds) and Rs 95,670 crore (30.99 percent of GSDP) without reserve funds. The target for debt to GSDP ratio for the year is 39.8 percent," he said.

Dhindsa said despite adverse circumstances, the state has been able to follow prudent debt management policy and contain the deficit within the target fixed by the 13th Finance Commission.

"The ratio of outstanding debt to GSDP was about 44.04 percent on an average during the 10th Plan which came down to 32.11 percent during the 11th Plan," he added.

Dhindsa said the state is expected to register an increase in VAT, which is likely to be Rs 28,524 crore against Rs 24,318 crore expected in the current year.

He said the liability on salary and wages, pension and retiral benefits and interest payments has been rising over the years and was 92.78 percent of revenue receipts during 2011-12 and is likely to be 71.36 percent during the current year.

The finance minister said that the state government will pay an interest of Rs 6,986 crore during current year on its outstanding debt of Rs 86,453 crore.

Dhindsa, in his 60 page budget speech detailed the allocations for various sectors, including agriculture, power, infrastructure development and power.

He earmarked Rs 66 crore during next year for relief of Rs 2 lakh each to 4,688 families having farm debts up to 2010.

Dhindsa said New Industrial Policy would be announced soon for boosting the business environment in the state.

"It will focus on inclusive growth, mapping inherent advantages of the state and would lay out the blue print for industrial revolution in the next 25 years," he said.

He said Rs 30 crore has been earmarked for supply of free tablets (Akash) to 1.5 lakh Class XI students.

The state has also proposed to set up 1,000 model schools in Public Private Partnership (PPP) mode for which the state government and Panchayats would contribute five acre of land to the developer, who would have to provide free education to all the students of that village.

He said Amritsar and Ludhiana will be covered under the new scheme called Safe City project. "The concept involves mapping the entire city, installation of CCTV cameras and sensors and use of Information Technology at a cost of Rs 135 crore," he said.


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