"Punjab Budget 2025: Balancing Priorities Amid Fiscal Challenges"

Editorial: Central or state budgets do not get the attention they used to get a decade and a half ago. Now budgets are considered to be just a record of income and expenditure recorded in the government books. Unlike the states, the central government has the power to increase or decrease many taxes or federal taxes, especially personal and corporate income taxes. That is why the central budget gets more attention.

The interest of the middle class or the corporate world in the central budget is more because of where they will get relief from this budget and where the financial burden will increase. After the implementation of the Goods and Services Tax (GST) system at the national level, the states no longer have the power to even tamper with the financial resources. State governments can only make a small reduction or increase in excise duty on alcohol or VAT on petroleum products (especially petrol/diesel), nothing more.

That is why state budgets usually include a clause of ‘no new taxes’ which may sound good to read and listen to, but does not do the states any good.

The budget presented by Punjab Finance Minister Harpal Singh Cheema in the state assembly on Wednesday is also based on the ‘no new taxes’ line. It is being welcomed and the number of those who call it ‘disappointing’ is not small.

The reactions are often purely political. This time, the farmers’ organizations are unhappy with the budget because the discipline of their state government is broken. On the other hand, the strategy of the business organizations has been that the concessions that are being given are good in their place, but more concessions are still needed. This makes the budget ‘not fulfilling expectations’.

Finance Minister Cheema claims that the fourth annual budget presented by the Bhagwant Mann government is ‘future-oriented’ and will put Punjab on the path of economic strength. This budget worth Rs 2.36 lakh crore focuses on policies like intensifying the war on drugs, boosting the education sector, increasing healthcare facilities and strengthening sports culture. To meet these policies, a healthy increase (five to eight percent) has been made in the financial provisions. Rs 14,524 crore has also been allocated to boost the agriculture sector.

This amount is 5 percent more than the amount allocated for the current financial year (2024-25). All these financial items show that ‘the government has not compromised on priorities like education, health and urban development.’ All these statements of the Finance Minister are correct to some extent.
The budget proposals show that the government revenue from various state sources during the next financial year will be Rs 1,11,740 crore.

The main contribution to this will be from GST and other state taxes. The state will get a share of Rs 25,703 crore from central taxes and Rs 10,570 crore will come in the form of central grant-in-aid. The government intends to take fresh loans of Rs 49,900 crore. Despite the huge gap between the expected expenditure and income, the government’s claim in the budget to bring the fiscal deficit to 2.51 percent and the fiscal deficit to 384 percent does not seem realistic. It is expected that during the debate on the budget in the Vidhan Sabha, Mr. Cheema will definitely clear these doubts as to how the huge gap between expenditure and income will be compensated.

The budget also does not include any financial provision for monthly financial assistance of Rs. 1000 for women. The failure to fulfill the election promise through the fourth budget is likely to give the opposition a chance to criticize the government, but economic pundits will consider it a bold move.

When the economic situation demands efficiency, it cannot be called wise to take populist steps. On the whole, the new budget of Punjab is not ‘populist’, but it is not one that forgets the interests of the state either. This is its main nature.