Government of Punjab

Department of Finance 


Subject: Punjab Budget 2006-07. 

Fiscal Trends & Economy: 

            This is the fifth consecutive Budget of the Congress Government, led by Capt. Amarinder Singh.  The vision spelt out in the last year’s budget was translated into a number of initiatives This budget reflects our continuing commitment to the goals spelt out in the earlier budgets and, at the same time, includes new initiatives to respond to the felt needs of the people.  Through prudent fiscal policies and financial discipline, our Government has been able to pull the State out of the financial morass that it was in when it assumed office.

         This is evident from the following major fiscal indicators:-

                                                   (Rs. in crore)

      Description 2001-02








      1 2 3 4 5
      Revenue Deficit 3781 3391 1710 1390
      Revenue Deficit as percentage of GSDP 5.33% 3.83% 1.74% 1.28%
      Revenue Deficit as percentage of Revenue Receipts 42.34% 24.56% 9.56% 6.93%
      Fiscal Deficit 4959 4115 3659 3576
      Fiscal Deficit as percentage of GSDP 6.99% 4.65% 3.73% 3.28%
      Total Debt 32496 44982 49306 53391
      Debt Stock as percentage of Revenue Receipts 460.39% 402.55% 333.62% 331.37%
      Salaries, Pensions and Interest payments as percentage of Revenue Receipts 118.24% 97.62% 76.34% 73.91%

      Fiscal deficit, which was 6.99% of GSDP in 2001-02 is likely to come down to 3.28 percent in 2006-07. Committed expenditure on salaries, pensions and interest payments is estimated to decrease from 118.24 percent of revenue receipts in 2001-02 to 73.91 percent in 2006-07. The revenue deficit, which was Rs.3781 crore in 2001-02 is expected to decrease to Rs.1390 crore in 2006-07. Continuing on the path of fiscal consolidation, State Government is hopeful of achieving revenue balance by 2008-09. 

      Capital expenditure which was Rs. 682 crore in 2004-05 is likely to increase to Rs. 1980 crore in 2005-06 and Rs. 2376 crore in   2006-07.

      The State’s economy is picking up and the rate of growth is now 5.5 percent per annum whereas in 2001-02 it was only 2 percent.   

Development Highlights:

      We have, now, launched a credible development effort, after a gap of many years. 

      The bold initiatives taken by the Government are:


State Finance Commission:

      The Third State Finance Commission has submitted its Interim Report, containing recommendations for devolution for the year 2006-07. With the implementation of the recommendations of the Commission, funds to the tune of Rs.496 crore will to be transferred to the Panchayati Raj Institutions and Urban Local Bodies during the year 2006-07. Out of this, the share of Panchayati Raj Institutions is Rs.308.03 crore and that of Municipalities is Rs.187.97 crore. Together with grants of Rs.99 crore, recommended by the Twelfth Finance Commission, which include Rs.64.80 crore for Panchayati Raj Institutions and Rs.34.20 crore for Urban Local Bodies; a total sum of Rs.595 crore will flow to the rural and urban local bodies in 2006-07. This is the highest level of devolution ever provided.   

Annual Plan 2005-06 performance:

      Plan performance during the current financial year has substantially improved over that of the last year.  An expenditure of Rs. 2116 crore, against a plan provision of Rs.3557.86 crore has already been incurred (59.46%) as on 31.12.2005, as compared to an expenditure of Rs. 1183 crore during 2004-05.

Annual Plan 2006-07

      The size of the Annual Plan 2006-07 has been fixed at Rs. 4,000 crore against the revised outlay of Rs. 3557.87 crore for the year 2005-06 this indicates an increase of 12.42%. 


       On the recommendations of the Punjab State Farmers Commission, the Government will implement an Agriculture Renewal Programme for small farmers with holdings up to 4 hectares of land.  Such farmers constitute about 65 percent of agriculturists and cultivate about 30 percent of the agricultural land in the State. 

      State Government has launched a set of programs to increase productivity in agriculture and conserve soil & water resources, which include:



      A provision of Rs.292.24 crore has been made in the Annual Plan 2006-07 against an approved outlay of Rs.221.76 crore for the financial year 2005-06.  Major works in this sector are:

Rural Development:

Urban Development: 

      The Government plans to provide infrastructural facilities needed for the fast increasing urban population with the following proposals:


Civil Aviation:

       Government of India have approved, in principle, the setting up of an international Civil Air Port at Halwara in district Ludhiana, catering both to passengers and cargo.    




 An outlay of Rs.240.96 crore has been provided for this sector in the Annual Plan 2006-07, against the outlay of Rs.177.51 crore during 2005-06. The major projects under this sector are:



 It has been decided that, all the 1,310 rural dispensaries will be handed over to Panchayati Raj Institutions, who will be provided funds at the rate of Rs 3.60 lac per dispensary per annum to engage service providers. A sum of Rs 48 crore is proposed to be devolved to Zila Parishads for this purpose in 2006-07.  

      The following important initiatives will be launched to ensure comprehensive health care to citizens through a network of Public Sector Health Institutions:-


Welfare of Scheduled Castes & Backward Classes:

      For 2006-07, the allocation under the special component plan has been increased from Rs. 934.62 crore (in Revised Estimates 2005-06) to Rs. 1154.00 crore, indicating an increase of 23.5 percent. An amount of Rs.65.65 crore has been provided in the Annual Plan 2006-07 exclusively for the welfare of SCs and BCs in the State.  This outlay includes:


Social Welfare:

 To help the aged, it has been decided to increase the amount of old age pension by 25% from Rs.200/- to Rs.250/- per month.  The State Govt. will open 2691 new Anganwadi Centres under the Integrated Child Development Scheme.    

Relief and Rehabilitation

      The Government of India has announced a Rehabilitation Package for the victims of 1984 riots, many of whom had migrated from other States to Punjab.  This  Package announced in January 2006 will benefit about 23,000 families in Punjab.

      Punjab Government has already initiated steps to implement the Package, with an allocation of Rs. 450 crore for this purpose.   

Defence Services Welfare:

 Three important decisions taken by our Government are:


      In addition:


        We expect an investment of about Rs. 2,500 crore through public private partnership in the next two years.  The major projects through public-private participation already awarded by the Government are:


 Other important infrastructure projects undertaken by the Government are:-


Roads & Bridges


Road Transport:

       The State Govt. will launch a Public Transport Reform Programme   with three important features.


      Rs.20 crore for constructing bus stands at sub-divisional level towns with a contribution from the Punjab Infrastructure Development Board.   

Punjab Nirman Programme:

       The Government has launched the ambitious Punjab Nirman Program within an allocation of Rs. 500 crore. Out of this, Rs. 100 crore has been disbursed this year and Rs. 400 crore is proposed in the annual plan next year.  The scope of the Program includes all major types of rural and urban infrastructure.

      Out of the total outlay of Rs. 500 crore, a sum of Rs. 100 crore will be spent on State-level initiatives.  The balance Rs. 400 crore shall devolve to rural areas (Rs. 264.32 crore) and urban areas (Rs. 135.68 crore).


      The introduction of VAT has been the biggest tax reform in India since independence.  We   shall continue to   address problems brought up by tax payers from time to time. In this regard, the following measures are being taken:-


Annual Financial Statement

      The summary of the Annual Financial Statement according to the Budget Estimates 2006-2007 is as under: -

      Consolidated Fund     (Rs. in crore)


      The deficit on revenue account is estimated at Rs. 1390 crore for the year 2006-07, as against Rs. 1710 crore in 2005-06 (Revised Estimates) and Rs. 3391 crore in 2004-05.  We are committed to a fiscal reform path which will enable us to achieve a positive revenue balance in the next few years.