The financial crunch that Punjab is facing was visible on Thursday when state finance minister Manpreet Singh Badal agreed that “Punjab’s Annual Plan 2008-09 of about Rs 6,000 crore was falling short to Rs 3000 crore to Rs 4,000 crore”.

During an exclusive interview at his office in Punjab Civil Secretariat, the finance minister told FE that he had his first budget meeting with the chief minister Parkash Singh Badal at latter’s official residence on Wednesday to finalise Annual Plan for 2008-09. He said he would have two more meetings with the chief minister next week to be ready with the plan by February 19, when he along with the chief minister are slated to meet Planning Commission deputy chairman Montek Singh Ahluwalia.

Badal said, “The size of the Annual Plan of Punjab would be of about Rs 6,000 crore.” He said the Annual Plan of 2007-08 for Punjab was of Rs 5,111 crore while the one in 2006-07 was of Rs 4,000 crore.

Badal, however, said that as the finance minister of a state like Punjab he felt hurt to present a plan of the size of just Rs 6,000 crore as Punjab once had a place of pride on all parameters like per capita income, growth rate

Even if Punjab’s plan is pegged at Rs 6,000 crore, it will be 50% of the Haryana’s plan because its entire plan of Rs 6,300 is a budget plan, which means it will be funded from the provisions made in the budget, whereas Punjab’s plan will include component of the Punjab State Electricity Board, Punjab Infrastructure Development Board etc, projects which are not funded from the budget.

Punjab’s liabilities include power subsidy of about Rs 2,000 crore that will be carried forward to the next fiscal year in the budget proposals. Then there will be enhanced bill of the atta-dal scheme during the next year. Even interest liability on the loan will go up by Rs 300 to Rs 400 crore during the next fiscal year.

Badal said that “ideally Punjab’s Annual Plan size should be of the size of about Rs 10,000 crore”. He, however, observed that his target was that when he presents his last budget four years from hence, the Annual Plan of Punjab should be of Rs 15,000 crore.

He further said that he would have at least three meeting with the chief minister before final plan is presented to the Planning Commission on February 19.

Badal said that “as per tentative estimates for the Annual Plan 2008-09 Punjab needs to mobilise additional resources of about Rs 3,000 crore to Rs 4,000 crore to expand the size of its annual plan for the next fiscal year and meet the financial liabilities”.

He agreed the resource mobilisation that the government had targeted in the last budget had fallen short by about 100 crore. He said there was need to introduce technology for better tax compliance.

The Punjab government has reached a stage where it will have to take a decision to mobilise the additional resources. At present, Punjab is giving Rs 4,000 crore as interest on the loan worth Rs 52,000 crore availed during the past decades. Next year the loan money will go up to Rs 55,000 crore. Punjab has already availed loan of about Rs 3,000 crore during till date during the current fiscal year. The loan figure will touch Rs 5,000 crore for the current fiscal year by March 31.