Under the Fifteenth Finance Commission Project

 > Progressive elimination of revenue deficit keeps the state governments consistent with fiscal sustainability. The figure shows the performance of the government of Punjab vis-à-vis the FRBM target for revenue deficit (2012-13 to 2016-17). The shaded area depicts the gap between FRBM targets and the actuals. There is observed convergence in the performance of the government of Punjab vis-à-vis the Fiscal Responsibility and Budget Management (FRBM) target for the year 2016-17; although the State was not able to reach close to the assigned targets in the previous years.

Source: CAG State Finances Reports (2012-2017)
 

-> Disregarding the fiscal prudence norms, the State of Punjab has not been able to reach close to the assigned targets of Fiscal Deficit. In the year 2016-17, the Fiscal Deficit went abnormally high to (-)11.02 as against the FRBM Fiscal Deficit target of (-)3.0, this is excluding the additional borrowings of Rs. 57.69 Billion under UDAY scheme. If this amount is included, then it will drive Fiscal Deficit to a new high. This explains the widening gap between the receipts and the expenditure of the government.

Source: CAG State Finances Reports (2012-2017)
 

-> A low value of outstanding debt to GSDP Ratio indicates that the state economy is vibrant to pay back debts without incurring further debt. The figure depicts the total outstanding debt relative to GSDP with respect to FRBM and budget targets. During 2011-12 to 2015-16, the government of Punjab successfully maintained the ratio of total outstanding debt to GSDP within the prescribed limit. However, post 2015-16, a very high value of 42.72% as against the FRBM target of 31.49%; reflects the imbalance in the fiscal prudence of the state. This can be majorly attributed to UDAY loan and Cash Credit Limit accounts. The increasing debt GSDP ratio may increase the possibility of the state falling into a debt trap.

Source: CAG State Finances Reports (2012-2017)
 

-> The Telangana state government provided financial support to PSUs in various forms though its annual budget. In our next post, we’ll see how well the PSUs fared in their performance with such budgetary support.

-> Profit and Loss of Working PSUs exclusive to Telangana (In Bn INR). We can see that as budgetary support has been increasing (as shown in our last post), the losses incurred by these PSUs have also been increasing.