Punjab's debt to cross Rs 1 lakh cr, govt unfazed

Soft drinks, cigarettes to cost more

Punjab’s total outstanding debt is projected to cross whopping Rs 1 lakh crore mark in next fiscal even as SAD-BJP led state government dubbed the rising debt as productive.

While presenting the Budget for 2013-14 here on Wednesday, finance minister Parminder Singh Dhindsa said, “for the year 2013-14, the state plans to borrow Rs 9,261 crore and the outstanding debt by end of 2013-14 will be about Rs 1,02,282 crore with reserve funds and Rs 95,670 crore without reserve funds.”

Punjab’s outstanding debt including reserve funds went up from Rs 55,982 crore in 2007-08 to Rs 1,02,282 crore (budget estimates) in 2013-14. Similarly, outstanding debt without reserve funds shot up from Rs 52,923 crore in 2007-08 to Rs 95,670 crore in (BE) 2013-14, as per Budget documents.

The minister maintained that the ratio of outstanding debt to gross state domestic product (GSDP) was well within the parameters fixed by 13th Finance Commission.
He attributed the surge in debt to the earlier militancy, tax concessions to neighbouring states and inadequate financial support from the Centre.

The outstanding debt to GSDP was 32.06 per cent in 2011-12 against the target of 41.8 per cent given by 13th Finance Commission.

This ratio also went down from 44.04 per cent during 10th plan (2002-07) to 32.11 per cent in 11th plan (2007-12), he added.

Badal hails Budget

Talking to media, deputy chief minister Sukhbir Singh Badal termed the rising borrowings as productive debt.

“It is a productive debt and it is different from non-productive debt where you make payment salary out of borrowings. We have to make infrastructure, roads and hospitals and our debt to GSDP ratio has come down drastically in the past,” he said.

Hike in VAT

Soft drinks and cigarettes will cost more effective April 1, with the government hiking the Value Added Tax (VAT).

Dhindsa proposed to abolish 5.5 per cent VAT on items used by children, senior citizens and the poor.

The children’s 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.

Surcharge

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

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