Power is set to cost more in Punjab following a proposal by Finance Minister Manpreet Singh Badal to increase the electricity duty by 3 per cent in his Budget for 2010-11, presented in the assembly today.

Badal, in budget estimates for the coming financial year said the electricity duty was proposed to be hiked from 5 per cent to 8 per cent for funding the green initiatives of the government. This comprises a three-point programme focusing on agriculture, energy and water.

"The Green Initiative of the government of Punjab is a climate change action plan. It is a comprehensive strategy to address the most critical aspects of the challenge posed by the climate change," he said.

The three per cent hike in electricity duty would fetch the state annually Rs 270 crore, he said, adding that no other tax proposals have been mooted as Punjab would get "additional revenue of Rs 1,930 crore in 2010-11" due to the resource mobilisation measures.

The Budget proposals would a leave revenue deficit, which is excess of government expenditure over receipts for meeting its current needs, of Rs 3,787.73 crore.

Announcing slew of sops, the finance minister announced sharp cut in the entertainment duty payable by cinema halls from 125 per cent to 25 per cent, while fully exempting the theatres from tax.

Award scheme of Rs one lakh annually for those getting admission to the Indian Military Academy and National Defence Academy was also proposed. .

Besides, the state also raised the allowances of all war decorated soldiers by 40 per cent.

"We are also conscious of our duty towards the welfare of our martyrs/soldiers and their families and to that extent I propose Rs 4 crore for providing grant of Rs five lakh each for purchase of plot/house for the widows of martyrs/disabled soldiers," Badal said.

All this measures may leave a revenue receipts of Rs 29,617.33 crore and revenue expenditure of Rs 33,405.06 crore, besides Rs 3,787.73 crore as revenue deficit.

"The deficit on revenue account for the year 2010-11 is estimated at Rs 3,787.73 crore against the revised estimate of Rs 4,151.51 crore for the year 2009-10," he said.

Increase in deficit over the previous year is mainly on account of implementation of the recommendations of the Fifth Punjab Pay Commission, Badal added.

The annual plan size of the state has been fixed at Rs 9,050 crore for 2010-11 laying stress on irrigation, power, education and health.

"The state is likely to implement a total plan of Rs 7,363 crore as per Revised Estimates for 2009-10 against the approved out of Rs 8,625 crore," he said

Badal said that the government has been unable to achieve desired levels of public investment and spending on account of the huge debt burden of the state, expected to reach Rs 64,924 crore by this fiscal end.

"The total debt stock has risen from Rs 32,496 crore in 2001-01 to Rs 57,787 crore in 2008-09. The liability for servicing this is also increasing in tandem," he said.

Interest payments have also dented Punjab's finances, said Badal, adding that the only solution to bail the state out of this was either to write off or reschedule some debt, for which it had requested the 13th Finance Commission.

"Despite our best efforts at debt management, additional resource mobilisation and the tax resources of the state having shown buoyancy, it is due to inadequate support from the Government of India, that we continue to struggle with our debt burden," he said.

Badal said that the state was "immensely disappointed" with the report of the 13th Finance Commission which "totally overlooked" the demands made by Punjab in its detailed memorandum.

"The state government had requested the Commission to meet at least 50 per cent of expenditure on implementation of the Pay Commission recommendations and to take cognisance of the expected revenue deficits on pay revision," he said.

"The state inter alia also requested the Commission to provide Rs 12,743 crore as 90 per cent cost of activities such as maintenance, repair in the state, which would facilitate more food grain production and reduce the nation's dependence on costly imports," he added.

The 13th Finance Commission has marginally increased its share in Central taxes to 32 per cent from 30.5 per cent.

He also pointed out that notwithstanding the gains in productivity and production, the economic position of the farmers is deteriorating in the state.