Budgets 2024-25 of Punjab and Haryana: Usual or Focussed | Sher Singh Sangwan

Punjab and Haryana States with broadly a similar social and economic background are generally compared by people and academics in terms performance of economy, governance and management of finance. Financial situation and the priorities in allocation of expenditure usually affect the other financia,social and economic parameters too. At present, the states are governed by two different political parties’ vij., Aaam Aadmi Party in Punjab for two years and Bhartiya Janata Party in Haryana for the last 10 years. It is widely known that finances are stretched more in Punjab than Haryana in terms Revenue deficits (RDs) and debt liabilities in the last two decades. To comment on their latest status, the item wise expenditure and vital fiscal parameters are presented in Table 1. Due to different pattern of budget presentation, we have taken broad items only to make both comparable.

Notes: Rev. Expd = Revenue Expenditure, Cap Expd= Capital Expenditure. GSDP= Gross State Domestic Product Source: Budgets 2024-25 at Glance of Punjab and Haryana as presented on 5th March and 26 February 2024
The Table shows that the committed expenditure (CE) of Interest on loans, salaries and pensions are about 62 % (38.48/(62.04)X100) of revenue expenditure(RE) in Punjab compared to that of 52 percent in Haryana. The Actuals of 2022-23, Revised Estimates (RE) of 2023-24 show that in both the states are unable control the CEs. The remaining revenue expenditure is 24 % in Punjab and 44 % in Haryana. Of that the electrify subsidy is about Rs20000 crore for tube wells, domestic consumers and industry in Punjab as against about Rs10000 crore in Haryana. Further, in Haryana the social security and honorarium and pensions to elected representatives from panchayat member to member of Legislative Assembly is much more than Punjab. All these are also like committed expenditures. Hence the revenue expenditure at the disposal of government may be around is Rs20000 in Punjab and Rs40000 in Haryana. Besides, there is capital expenditure of about Rs8000 in Punjab and Rs20000 in Haryana

Of the remaining revenue and capital expenditure, Punjab has allotted the maximum for new initiatives in education especially schools, health, rural development and transport as appended in its budget at glance. In Haryana, there is usual increase in allocation for education, urban development, procurement in agriculture, solarisation of pump-sets. Its budget speech also announce allocation for new initiatives like waiver of interest & penalty or chronic cooperative defaulters, repair of Chaupals, houses/plots to urban & rural poor and free pilgrimage. The major investments announced are a new thermal plant in Yamunanagar, Mega Food Park in Rohtak , three airstrip and drone to Lakhpati Didies of self help groups. Whereas Punjab with lesser funds has taken new initiative education in schools, health services, rural development without any major capital investment. Thus, the budget of Haryana is more broad- based covering more areas and sections of the society, though with small one time allocations, whereas Punjab has focussed on school education, sports and health services.

In terms of fiscal discipline, both are having higher debt liabilities and revenue deficit then average of all states and Union Territories (annex 1). Though, Haryana is satisfied that its debt and RD as their percentage to GSDP is less than the prescribed limit by FRBM Act while Punjab has already surpassed for both. However, the average increase in revenue deficit in last 6 years is higher at 22.3 percent in Haryana compared 12.14 percent in Punjab. In the last two years after AAP Government in Punjab, there is decrease in RD of Punjab by 5.58 % as against increases by 5.93 % in Haryana. Thus Haryana is fast approaching Punjab in debt liability which may be harmful to the state in long run.

March 25, 2024

(Author: Dr. Sher Singh Sangwan, Former Professor State Bank of India)