Chandigarh: Punjab’s finances are under increasing strain, with expenditure continuing to outpace receipts and liabilities steadily rising, according to the latest report by the Comptroller and Auditor General (CAG) of India on the state’s finances for 2023–24.The report, tabled in the Punjab assembly on Monday, highlighted a persistent mismatch between receipts and expenditure, raising concerns about the sustainability of public finances.Punjab’s revenue receipts grew from Rs 61,575 crore in 2019–20 to Rs 89,192 crore in 2023–24, registering a compound annual growth rate (CAGR) of 9.71%. Capital receipts also rose from Rs 43,891 crore to Rs 46,902 crore in this period. However, the share of grants-in-aid from Centre declined from 23.68% of revenue receipts in 2019-20 to 16.03% in 2023-24, indicating reduced dependence on central assistance. During the year, the state received Rs 3,184.97 crore as Centre’s share for centrally sponsored schemes.At the same time, revenue expenditure increased from Rs 75,860 crore (14.13% of GSDP) in 2019-20 to Rs 1,17,407 crore (15.76% of GSDP) in 2023-24, growing at a CAGR of 11.54%. Revenue expenditure consistently accounted for 80% to 96% of total expenditure during this period. As a result, revenue deficit widened to Rs 28,215 crore (3.79% of GSDP) in 2023-24, compared with Rs 14,285 crore (2.66% of GSDP) in 2019-20.The report also noted the state spent only Rs 4,743 crore on capital expenditure during 2023-24, accounting for just 3.88% of total expenditure. Capital spending was only 4.4% of total borrowings, indicating that borrowed funds were largely used for current consumption and repayment of existing debt rather than for asset creation or development.Punjab’s fiscal deficit increased to Rs 33,115 crore (4.45% of GSDP) in 2023-24 from Rs 16,826 crore (3.13% of GSDP) in 2019-20. A large portion of the state’s revenue expenditure continues to be tied up in committed liabilities such as interest payments, salaries, and pensions. These accounted for 65% of revenue expenditure in 2023-24, amounting to Rs 76,388 crore, compared with Rs 52,544 crore in 2019-20. When combined with other inflexible expenditure, these components together accounted for Rs 88,808 crore (75.64% of revenue expenditure) in 2023-24, leaving limited fiscal space for development spending and capital investment.Subsidies eat up non-committed expensesSubsidies also showed a rising trend, increasing from Rs 10,161 crore in 2019-20 to Rs 18,770 crore in 2023-24. Power subsidies formed the overwhelming share, ranging between 92% and 99% of the total subsidies during this period. In addition, the state spent Rs 501.24 crore on implicit subsidies.Off-budget borrowingsThe report pointed to off-budget borrowings of Rs 4,092.78 crore raised through public sector undertakings and parastatals as of March 31, 2024. These borrowings do not flow through the consolidated fund but still need to be serviced through the state budget.Contingent liabilitiesIn 2023-24, state govt provided guarantees worth Rs 5,594 crore against borrowings, while Rs 1.17 crore was paid to discharge an invoked guarantee related to the Punjab State Industrial Development Corporation Limited. The report noted that the state’s decision to revert to Old Pension Scheme (OPS) through a notification on Nov 18, 2022, could increase financial burden and affect debt sustainability.Overall liabilities of the state, including public debt and public account liabilities, stood at 44.27% of GSDP when off-budget borrowings are included. The debt-to-GSDP ratio rose from 42.71% in 2019-20 to 43.72% in 2023-24, indicating that stabilising debt may remain difficult in near future. The report also observed a large proportion of the state’s debt receipts was used to repay existing borrowings, including principal and interest, with repayments ranging between 87.94% and 117.01% of total debt receipts between 2019–20 and 2023–24. In terms of fiscal responsibility targets, the state recorded a revenue deficit of 3.79% of GSDP against the target of 3.52%, while the fiscal deficit stood at 4.45% of GSDP against the target of 4.6%. Debt remained within the prescribed limit at 43.72% of GSDP against the ceiling of 46.81%.Irregularities in budget mgmtThe report also pointed out irregularities in budget management. Supplementary provisions amounting to Rs 1,147.64 crore in 20 cases during 2023-24 proved unnecessary, as actual expenditure did not even reach the level of original allocations. Budgetary allocations were based on unrealistic proposals, as in 12 out of 42 grants, savings excluding surrenders were more than Rs 100 crore. The excess expenditure of Rs 5,242.75 crore for 2023–24 and Rs 1,475.11 crore for 2022–23 was required to be regularised by the state legislature.
