As the 16th Finance Commission is scheduled to visit Punjab on July 22 and 23, the Punjab Government is all prepared with its compelling list of demands aimed at securing crucial fiscal grants, resolving ongoing conflicts over central schemes, and addressing the financial strain caused by GST implementation. Among the key requests is the release of pending central funds totaling Rs 10,000 crore approximately, a move seen as vital for the state's economic stability and growth.
With Punjab grappling with fiscal challenges exacerbated by GST implementation, the Chief Minister Bhagwant Mann has convened a high-level meeting on July 16 to strategize on securing vital fiscal grants and resolving longstanding disputes over central schemes.
At the forefront of Punjab’s agenda is the urgent release of pending central funds amounting to approximately Rs 10,000 crore. The Finance Secretary Ajoy Kumar Saini has been leading preparations, engaging with departmental heads to meticulously outline Punjab’s financial imperatives ahead of the Commission’s arrival. The agenda, thus prepared, will be meticulously discussed in the July 16 meeting led by CM Mann and Finance Minister Cheema.
Central to Punjab’s demands are allocations under critical rural development schemes such as the Rural Development Fund (RDF) and Market Development Fee (MDF), totaling Rs 6,767 crore. These funds are crucial for bolstering rural infrastructure, enhancing market facilities, and promoting agricultural growth — a cornerstone of Punjab's economic landscape.
Additionally, the state seeks Rs 650 crore for the National Health Mission to strengthen healthcare infrastructure and Rs 1,600 crore as Special Capital Assistance to address infrastructure deficits. The stalled PM-Schools for Rising India (PM-SHRI) project, aimed at revitalizing school education, remains a pressing concern, with Punjab urging the release of Rs 515.55 crore earmarked for comprehensive educational reforms.
The backdrop of Punjab's fiscal predicament is underscored by the strain caused by GST implementation, which has curtailed the state's ability to generate independent revenue streams through taxation. The state claims that GST has centralized revenue generation, significantly reducing Punjab's income from various taxes. The State argues that it now relies heavily on central schemes and needs increased financial support, especially as opposing parties at the center allegedly impact the flow of funds to Punjab.
A senior official said that the state's economic situation necessitates significant relief from the Finance Commission to avert potential financial crises. The rising interest on debts and out-of-control subsidies are major concerns that Punjab plans to address during the Commission's visit, said the official.
Of late, the Chief Minister Mann and his Finance Minister Harpal Singh Cheema held a strategic meeting with former economic advisor Arvind Subramanian, seeking his expertise in stabilizing Punjab's economy, my drafting a robust presentation for the Finance Commission, hoping to secure relief similar to what the 15th Finance Commission had provided.
Notably, in the past, the 15th Finance Commission had granted Rs 25,000 crore to Punjab over five years. However, the state struggled to utilize these funds effectively, often redirecting them to subsidies rather than infrastructure and critical developments.
As the 16th Finance Commission's visit approaches, Punjab is preparing to make a strong case for much-needed financial aid. The outcome of this visit could significantly influence the state's economic trajectory, determining whether it can bridge the growing gap between income and expenditure and manage its escalating debt.
Punjab’s Demands
· Substantial grants similar to the Rs 25,000 crore provided by 15th Finance Commission over five years
· Assistance to manage rising debt interest and subsidies effectively
· Address conflicts over central-state programs like RDF, MDF, PM-SHRI, and Arogya Mandir to avoid grant reductions
· Compensation for revenue loss due to GST implementation, which has centralized income generation
· Urgent release of Rs 10,000 crore in pending central funds for various development initiatives
· Overall support to stabilize Punjab's economy, bridge income-expenditure gaps, and manage escalating debt
