Government of Punjab
Department of Finance
Subject: Punjab Budget
Fiscal Trends &
This is the fifth consecutive Budget of the Congress
Government, led by Capt. Amarinder Singh. The vision spelt out
in the last year’s budget was translated into a number of initiatives
This budget reflects our continuing commitment to the goals spelt out
in the earlier budgets and, at the same time, includes new initiatives
to respond to the felt needs of the people. Through prudent fiscal
policies and financial discipline, our Government has been able to pull
the State out of the financial morass that it was in when it assumed
This is evident from the following major fiscal indicators:-
(Rs. in crore)
|Revenue Deficit as
percentage of GSDP
|Revenue Deficit as
percentage of Revenue Receipts
|Fiscal Deficit as percentage
|Debt Stock as percentage
of Revenue Receipts
and Interest payments as percentage of Revenue Receipts
deficit, which was 6.99% of GSDP in 2001-02 is likely to come down to
3.28 percent in 2006-07. Committed expenditure on salaries, pensions
and interest payments is estimated to decrease from 118.24 percent of
revenue receipts in 2001-02 to 73.91 percent in 2006-07. The revenue
deficit, which was Rs.3781 crore in 2001-02 is expected to decrease
to Rs.1390 crore in 2006-07. Continuing on the path of fiscal consolidation,
State Government is hopeful of achieving revenue balance by 2008-09.
expenditure which was Rs. 682 crore in 2004-05 is likely to increase
to Rs. 1980 crore in 2005-06 and Rs. 2376 crore in 2006-07.
State’s economy is picking up and the rate of growth is now 5.5 percent
per annum whereas in 2001-02 it was only 2 percent.
have, now, launched a credible development effort, after a gap of many
bold initiatives taken by the Government are:
- Clearance of a record level
of private investment, amounting to about Rs. 56,000 crore, in various
industrial and housing projects. Out of this, investment to the
tune of Rs. 4,000 crore has already materialized.
- State’s tax revenue is likely
to increase from Rs. 6945 crore in 2004-05 to Rs. 8608 crore in 2005-06
and further to Rs. 9811 crore in 2006-07.
- Punjab was adjudged the best
administered state in India by an independent survey conducted by a
reputed publishing house.
- Several important IT companies
have set up their units in Punjab, including one of the world’s largest
computer manufacturers, and two of India’s largest software companies.
- Historically, our share of
foreign direct investment has been very low, amounting to less than
1% of the FDI flowing into India. This is changing quickly, and Punjab
is now being recognised as a most favoured investment destination.
- State Government’s policies
towards diversification of agriculture into high value-added produce
and larger investment into research and development, marketing, processing
and transportation have imparted a new impetus to agriculture.
State Finance Commission:
Third State Finance Commission has submitted its Interim Report, containing
recommendations for devolution for the year 2006-07. With the implementation
of the recommendations of the Commission, funds to the tune of Rs.496
crore will to be transferred to the Panchayati Raj Institutions and
Urban Local Bodies during the year 2006-07. Out of this, the share of
Panchayati Raj Institutions is Rs.308.03 crore and that of Municipalities
is Rs.187.97 crore. Together with grants of Rs.99 crore, recommended
by the Twelfth Finance Commission, which include Rs.64.80 crore for
Panchayati Raj Institutions and Rs.34.20 crore for Urban Local Bodies;
a total sum of Rs.595 crore will flow to the rural and urban local bodies
in 2006-07. This is the highest level of devolution ever provided.
Annual Plan 2005-06
performance during the current financial year has substantially improved
over that of the last year. An expenditure of Rs. 2116 crore,
against a plan provision of Rs.3557.86 crore has already been incurred
(59.46%) as on 31.12.2005, as compared to an expenditure of Rs. 1183
crore during 2004-05.
Annual Plan 2006-07
size of the Annual Plan 2006-07 has been fixed at Rs. 4,000 crore against
the revised outlay of Rs. 3557.87 crore for the year 2005-06 this indicates
an increase of 12.42%.
On the recommendations of the Punjab State Farmers Commission, the Government
will implement an Agriculture Renewal Programme
for small farmers with holdings up to 4 hectares of land. Such
farmers constitute about 65 percent of agriculturists and cultivate
about 30 percent of the agricultural land in the State.
Government has launched a set of programs to increase productivity in
agriculture and conserve soil & water resources, which include:
- A provision of 35.56 crore
in the Annual Plan 2006-07 for the development and promotion of agriculture
against an approved outlay of Rs.33.68 crore during 2005-06. For
‘Agriculture Diversification Research and Development Fund’,
an amount of Rs.10 crore was released during the current financial year.
- A grant of Rs.100 crore sanctioned
by the Government of India to the Punjab Agricultural University, Ludhiana,
in acknowledgment of its pioneering contribution to the green revolution.
- A provision of Rs.24 crore
under the ‘Agriculture Production Pattern Adjustment Programme’
for productivity and growth. This programme will be implemented
at an estimated cost of about Rs. 96 crore during the next 4 years.
- An outlay of Rs.4.36 crore
for the development of horticulture in the State in addition to the
grants being received from the Government of India under the National
- Contract farming, which has
enabled farmers to diversify into non-traditional crops. Such
arrangements now cover 340,000 hectares and the target for the next
year is 500,000 hectares.
- Facilitation of large corporates
to invest in agro-based projects. ITC, Reliance & Bharti Groups
have decided to invest over Rs.300 crore in agriculture production,
processing and marketing in Punjab.
- Sugarcane arrears: It will
be ensured that cane growers’ outstanding dues to the tune of Rs.
36.30 crore will be cleared by 31st March, 2006.
- We propose to set up 6 rural
business hubs in Punjab in collaboration with Industrial Associations,
Financial Institutions and Panchayats, and expand to 30 hubs in 3 years.
These hubs will provide access to information, finance and high quality
training for rural farmers, entrepreneurs and artisans to improve their
prospects and to assist them in self-employment ventures.
provision of Rs.292.24 crore has been made in the Annual Plan 2006-07
against an approved outlay of Rs.221.76 crore for the financial year
2005-06. Major works in this sector are:
- Extension of Phase-II of Kandi
Kanal from Hoshiarpur to Balachaur -Rs.34 crore.
- Construction of Shahpur Kandi
Dam – Rs.50 crore.
- Tubewells and other schemes
for deep tubewells in Kandi area –Rs.32.70 crore.
- Converting Banur Canal from
non perennial to perennial -Rs.5 crore.
- Construction of fields channels
- Rs.23.00 crore
- We have taken an important
policy decision to hand over the management of primary schools and dispensaries
in rural areas to Panchayati Raj Institutions and Urban Local Bodies.
We shall begin by handing over nearly 4,000 primary schools and all
1,310 rural dispensaries. PRI’s will recruit about 12,000 teachers
on regular basis at full wages.
- Village Development Fund has
been operationalised to provide low-cost sewerage facilities in 1692
villages at a total cost of Rs. 680 crore, out of which 10% will be
contributed by Panchayats and 90% will come from VDF. We hope
to cover the remaining 10,800 villages in Punjab in the next 5 years.
- Handing over the management
of about 450 rural veterinary dispensaries to Panchayati Raj Institutions,
along with funds for operating them.
- Gram Panchayats are the basic
unit of self-Government in villages. Sarpanches play a vital role in
their proper functioning. With the devolution of more functions
to Gram Panchayats, the responsibilities and duties of Sarpanches have
increased. Recognizing the services of Sarpanches and other functionaries
in the village, I am pleased to announce:-
- An honorarium of Rs. 600/-
per month to each Sarpanch.
- An increase in the honorarium
of Village Chowkidar from Rs. 200/- per month to Rs. 400/- per
- A grant of Rs. 300/- per month
to each Panchayat for cleanliness and sanitation of the village.
Government plans to provide infrastructural facilities needed for the
fast increasing urban population with the following proposals:
- PUDA will contribute Rs. 50
crore towards development of Mohali as super economic corridor.
- Municipal Development Fund
for water supply & sewerage projects totaling Rs. 458 crore has
become operative. Water supply projects in 122 towns of Punjab
and sewerage projects in 39 towns have been taken up. The State
will achieve 100% coverage of safe drinking water for its urban population
- Rs.135.00 crore to be spent
under the ‘Jawahar Lal Nehru National Urban Renewal Mission’
for the integrated development of Amritsar and Ludhiana cities.
- Rs.8.00 crore for the
implementation of ‘Sri Guru Ram Dass Development Project at Amritsar’.
- Rs.10.00 crore for ‘Prevention
of Pollution on River Satluj’ with participation of PIDB.
- Rs.31 crore for the development
of Patiala city as a counter magnet to the National Capital Region.
- Rs.20.00 crore for the implementation
of Integrated Development of Urban infrastructure in Bathinda City.
- Rs.34.20 crore for giving
grant-in-aid to Urban Local Bodies, as per recommendations of TFC, for
maintenance of civic services in the urban areas.
- In addition to the Municipal
Development Fund, an outlay of Rs. 522.16 crore have been provided for
development of urban areas.
Government of India have approved, in principle, the setting up of an
international Civil Air Port at Halwara in district Ludhiana, catering
both to passengers and cargo.
- The State Government has decided
to raise bonds through PSIDC for the payment of Rs. 480 crore backlog
of industrial subsidy in 3 to 4 years time.
- Textile Policy will be announced
in April, 2006.
- Octroi will be abolished in
consultation with urban local bodies.
- Extension of time for recovery
of interest-free loans will be granted.
- A policy for large manufacturing
units with investment of over Rs. 1,000 crore will be announced.
An outlay of Rs.240.96
crore has been provided for this sector in the Annual Plan 2006-07,
against the outlay of Rs.177.51 crore during 2005-06. The major projects
under this sector are:
- Sarv Shiksha Abhiyan (Rs.260.00
crore, including share of Govt. of India).
- “ICT (Information and Communication
Technology) in Schools” has been implemented in 1,306 schools this
year, another 1,306 schools will start this program in April 2006 and
the remaining 2,050 schools will be covered by July 2006, thereby achieving
full coverage of ICT in all 4,662 upper primary Schools in Punjab.
An outlay of Rs. 77.34 crore is proposed for the next year for this
- The Mid-day Meal program has
been successfully launched and is proposed to be extended to all government
schools next year. The allocation of Rs 13.1 crore this year is proposed
to be enhanced to Rs 34 crore in 2006-07 to fully meet the requirements
of this program.
- For the Indian Institute
of Science Education & Research in Punjab, announced by Hon’ble
President of India in his address to the Parliament, a token provision
of Rs. 5.00 crore has been made in the Annual Plan 2006-07.
- It is proposed to set up
‘Rajiv Gandhi National University of Law’ in Punjab during 2006-07,
for which a token provision of Rs. 5.00 crore has been made in the Annual
- An amount of Rs.2.00 crore
was released to the Punjabi University, Patiala for the setting up of
World Punjabi Centre at Patiala during the current financial year.
An amount of Rs. 3.00 crore has been provided in the Annual Plan 2006-07
for the construction of building of this centre.
It has been decided
that, all the 1,310 rural dispensaries will be handed over to Panchayati
Raj Institutions, who will be provided funds at the rate of Rs 3.60
lac per dispensary per annum to engage service providers. A sum of Rs
48 crore is proposed to be devolved to Zila Parishads for this purpose
following important initiatives will be launched to ensure comprehensive
health care to citizens through a network of Public Sector Health Institutions:-
- The National Rural Health
Mission was launched by the Honourable Prime Minister on April 12th,
2005, with an allocation of Rs 75.02 crore for Punjab. The objective
of this Mission is to ensure effective, affordable and quality health
care for rural people. The State Government has implemented all components
of this Mission including the Reproductive and Child Health Care Program
Phase 2, the Special Immunization Program and the upgradation of infrastructure.
- A new Civil Hospital at Nangal
(Rs.1.00 crore) and a Super Speciality Mother & Child Health Care
Hospital (Rs.7.60 crore) at Fatehgarh Sahib in the memory of Sahibzada
Zorawar Singh and Fateh Singh are being set up.
- Rs.22 crore has been provided
for the expansion and improvement of three Medical and Dental Colleges
in the State, which will be made autonomous by reconstituting them as
- Grant-in-aid to Baba Farid
University of Health Sciences will be provided for infrastructure.
- Education Commission will
be set up to recommend improvements in education at all levels.
Welfare of Scheduled
Castes & Backward Classes:
2006-07, the allocation under the special component plan has been increased
from Rs. 934.62 crore (in Revised Estimates 2005-06) to Rs. 1154.00
crore, indicating an increase of 23.5 percent. An amount of Rs.65.65
crore has been provided in the Annual Plan 2006-07 exclusively for the
welfare of SCs and BCs in the State. This outlay includes:
- Rs. 20 crore for the grant
of attendance scholarships to scheduled caste primary girl students.
- Rs.35 crore under the scheme
‘Aashirwad to scheduled castes/Christian girls, daughters of the Widows’
at the time of their marriage. The grant under this scheme has
been enhanced to Rs.15000/- from Rs. 6100/-.
To help the aged, it
has been decided to increase the amount of old age pension by 25% from
Rs.200/- to Rs.250/- per month. The State Govt. will open 2691
new Anganwadi Centres under the Integrated Child Development Scheme.
Relief and Rehabilitation
Government of India has announced a Rehabilitation Package for the victims
of 1984 riots, many of whom had migrated from other States to Punjab.
This Package announced in January 2006 will benefit about 23,000
families in Punjab.
Government has already initiated steps to implement the Package, with
an allocation of Rs. 450 crore for this purpose.
Defence Services Welfare:
Three important decisions
taken by our Government are:
- Enhancement in award money
to gallantry award recipients in lieu of land / stipend / pension;
- Exemption from VAT for all
CSD items; and
- Free treatment of ex-servicemen
at State Government hospitals.
- Rs. 7.25 crore released during
the current financial year to provide for the grant of Rs. 5 lac each
for the purchase of plot/houses for the widows of Martyrs and 75% to
100% disabled soldiers during the different operations from 1999 onwards.
Rs. 7.00 crore has been provided in the Annual Plan 2006-07.
- The Govt. of India has been
requested to set up a National Defence University
in the State.
We expect an investment of about Rs. 2,500 crore through public private
partnership in the next two years. The major projects through
public-private participation already awarded by the Government are:
- 11 road corridors measuring
about 600 km on BOT basis.
||Name of the Road Project
(Rs. in crore)
Other important infrastructure
projects undertaken by the Government are:-
- The Bus Stands at Jalandhar
and Ludhiana have been awarded on BOT basis and their construction has
- 9 ITIs have been made operational
by private parties who have taken over the management on a 30-year lease
- 3 incomplete polytechnics
are being awarded on the same pattern as ITIs.
- 3 State roads, 2 road over-bridges,
the prestigious Ludhiana ring road and Mohali bye pass projects are
being processed for public-private participation.
Roads & Bridges
- Rs.176.24 crore under the
‘NABARD assisted project for construction and widening of roads and
construction of bridges’.
- Rs. 100 crore for an ambitious
‘World Bank Project for Road Infrastructure’.
- Road Maintenance Fund has
been set up with an outlay of Rs.216 crore per annum.
- 21 Road over bridges on railway
lines will be constructed, and 2 under bridges at Mansa & Maur.
The State Govt. will launch a Public Transport Reform Programme
with three important features.
- First, the Punjab Roadways
and PRTC will be strengthened and modernized with new buses of better
quality. Modern inventory management, purchase and workshop systems,
and improved human resources management will be introduced. With these
measures, the Punjab Roadways is expected to reduce its losses and break
even in 4 years.
- Second, the policy regarding
identification, allotment and renewal of private sector bus routes will
be rationalised to make it more transparent.
- Third, the major cities of
Punjab namely, Amritsar, Jalandhar, Ludhiana and Patiala will be provided
with high-quality urban bus services with public- private participation.
crore for constructing bus stands at sub-divisional level towns with
a contribution from the Punjab Infrastructure Development Board.
Punjab Nirman Programme:
The Government has launched the ambitious Punjab Nirman Program within
an allocation of Rs. 500 crore. Out of this, Rs. 100 crore has been
disbursed this year and Rs. 400 crore is proposed in the annual plan
next year. The scope of the Program includes all major types of
rural and urban infrastructure.
of the total outlay of Rs. 500 crore, a sum of Rs. 100 crore will be
spent on State-level initiatives. The balance Rs. 400 crore shall
devolve to rural areas (Rs. 264.32 crore) and urban areas (Rs. 135.68
introduction of VAT has been the biggest tax reform in India since independence.
We shall continue to address problems brought
up by tax payers from time to time. In this regard, the following measures
are being taken:-
- A separate audit required
under VAT will be abolished where a dealer is already subject to income
tax audit and his turnover certified by qualified auditors.
- Pre-owned cars shall be taxed
at 4% without entitlement of Input Tax Credit.
- For exporters, Duty Entitlement
Pass Book (DEPB) and Duty Free Replenishment Certificate (DFRC) will
be placed in Schedule ‘A’ i.e. items attracting ‘Zero’
rate of VAT.
- Lump sum VAT shall be introduced
Annual Financial Statement
summary of the Annual Financial Statement according to the Budget Estimates
2006-2007 is as under: -
Fund (Rs. in crore)
- Revenue Account-
- Capital Expenditure- 2376.45
- Public Debt-
- Loans and Advances-
- Total Consolidated Fund (Net)-
- Public Account (Net)-
- Total Transaction (5+6)- (+)396.94
- Opening Balance-
- Closing Balance-
deficit on revenue account is estimated at Rs. 1390 crore for the year
2006-07, as against Rs. 1710 crore in 2005-06 (Revised Estimates) and
Rs. 3391 crore in 2004-05. We are committed to a fiscal reform
path which will enable us to achieve a positive revenue balance in the
next few years.