Punjab’s Fiscal Sustainability: A Two - Decade Analysis of Persistent Revenue Deficits (2004-2024) Chapter 7 | New Advances in Business, Management and Economics Vol. 11

 

This chapter examines Punjab’s revenue receipts, expenditure patterns, and revenue deficits from 2004 to 2024 to assess fiscal sustainability and policy effectiveness. A comprehensive analysis was undertaken by examining the components of both revenue receipts and revenue expenditure to identify the key components contributing to the revenue deficit. In addition to this, the percentage composition of components of Revenue receipts and expenditure was calculated to study the relative contribution. Thereafter, a descriptive and qualitative study of each component was undertaken through audit reports, government publications and research studies to enable a deep understanding of the underlying trends and drivers of Punjab’s revenue imbalance. Drawing on data from the Comptroller and Auditor General (CAG), PRS Legislative Research, NITI Aayog, and state budget documents, the study highlights persistent structural fiscal imbalances driven by high committed expenditures on salaries, pensions, interest payments, and subsidies. Despite growth in total revenue receipts from ₹13,807 crore in 2004-05 to ₹98,852 crore in 2023-24, revenue expenditure has risen faster, widening the revenue deficit from ₹3,391 crore to ₹24,589 crore. The Dependence on central transfers has increased, while own-tax and non-tax revenues remain constrained by a narrow tax base and low PSU returns. The analysis identifies episodic revenue declines linked to non-tax revenue shortfalls and external shocks, and underscores the impact of high interest payments on development spending. Policy recommendations include subsidy rationalisation, structural revenue reforms, debt management strategies, enhanced capital expenditure, industrial diversification, and promotion of renewable energy initiatives. The findings are significant in terms of policy formation as they provide insights into major causes of persistent fiscal stress in Punjab. Further, the policy recommendations based on these findings offer a roadmap for improving/correcting fiscal health and creating a sustainable public finance management.

 

 

Author(s) Details

Anjana Nagpal
Economics, DGC, Gurugram, Haryana, India.

 

Please see the book here :- https://doi.org/10.9734/bpi/nabme/v11/6556