The poor financial position, which is being attributed by the Akali Dal (Badal)-led coalition government mainly to low revenue receipts, has forced the Finance Department to wield the axe. Details, such as how much cut is to be effected in which schemes and projects, are being worked out.

The main source of revenue is sales tax and its growth is on the lower side. Last year's receipts from sales tax amounted to Rs 1,400 crore while going by other indicators, it should have been around Rs 4,000 crore.

The Cabinet sub-committee, constituted to finalise measures for fiscal discipline and headed by Chief Minister Parkash Singh Badal, has held several meetings. As a long-term policy is still to be evolved, some such ad hoc decisionsas increasing sales tax on diesel have been taken.

Earlier, the Finance Department has warned that "development would come to a halt and the Government would pay mainly for its continuance". Finance Minister Captain Kanwaljit Singh admitted that the State had little money. Funds were being diverted to pay salaries and pensions leaving virtually no money for capital expenditure, he said. According to senior officers, salary and pension bill is presently Rs 415 crore per month while revenue receipts amount to Rs 5,000 crore annually.

"The populist policies, including free power to the farm sector followed by the Chief Minister without any effort to mobilise matching resources or introduce fiscal discipline, has done all the damage," said a senior bureaucrat, not wanting to be named. "Mindless implementation" of the Pay Commission report has further upset the applecart. And the employees are far from happy.

Despite the abysmal economic condition of the State, Badal is not willing to do a rethink on thepolicies. The ruling Akali Dal would like to retain this vote bank especially in view of the forthcoming elections to the panchayat samitis next month. Badal has already announced free power supply would continue to the farm sector.

Financial institutions and the World Bank have refused to come to the rescue of the Badal Government on account of free power to the farm sector.