How (Not) To Break The Debt Trap: A Case Of Punjab Budget 2023

Punjab's Finance Minister Harpal Cheema presented his first full budget on March 10, 2023. After forming the government in March 2022, Aam Aadmi Party (AAP) presented the 'Vote on Account' budget and then in June 2022 presented its full budget for the rest of the financial year (2022-23).

- Rajiv Khosla

Budget 2023, apart from being the first complete budget of the current government, has some other unique features too. GST compensation from the centre, that was available till June 30, 2022 (starting from July 1, 2017) for all the states, will no longer be available during the financial year 2023-24. This means that the state government will have to manage its revenue with its own resources. At the same time, the rise in interest rates has made borrowing more expensive. Interest rates that had consistently remained low since FY08 till FY22 have risen sharply since the start of the Russia-Ukraine war. During his Budget speech, the Punjab finance minister revealed that Punjab's Gross State Domestic Product (GSDP) will remain ₹6.98 lakh crore in 2023-24, which is ₹60,000 crore more than ₹6.38 lakh crore in 202223. However, what needs attention in this context is that in the year 2020, the then finance minister Manpreet Badal estimated Gross State Domestic Product to be ₹6.44 lakh crore during 2020-21. Hence, it can be inferred that Punjab has come out of the effect of Covid-19.

While the state government described Budget 2023 as a tax-free budget focusing on agriculture, education and health sector in Punjab, opposition parties lamented that this budget has dashed all hopes of the common man. The budget is silent on women's social security, old age pension and widow pension that was promised by the Aam Aadmi Party before coming to power. Also, it is being highlighted that due to irrational and inadequate provisions, the budget will soon push the state into debt.

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