Cash-strapped Punjab’s debt crosses Rs 4 lakh crore; borrowings largely used to repay past liabilities, says Finance Minister
PTC Web Desk: Punjab’s outstanding public debt has climbed past the Rs 4 lakh crore mark, reaching approximately Rs 4.03 lakh crore after fresh borrowings during the current financial year, official figures indicate.
Between April 2025 and January 2026, the state government raised Rs 20,769.63 crore through loans, adding to its overall debt burden. Projections suggest the total outstanding liability could touch nearly Rs 4.17 lakh crore by the close of the financial year.
As of March 31, 2025, Punjab’s debt stood at Rs 3.83 lakh crore, accounting for over 44% of the state’s Gross State Domestic Product (GSDP). The rising debt trajectory reflects a long-term pattern stretching back decades. When the Aam Aadmi Party (AAP) assumed office, the state’s debt was around Rs 2.82 lakh crore. Earlier, during the Congress government’s tenure beginning in 2017-18, the outstanding amount was Rs 1.82 lakh crore. In 2007-08, Punjab’s debt was recorded at Rs 55,982 crore. Historical data shows that in 1952, the undivided Punjab carried a debt of Rs 78.31 crore, which had risen to Rs 300 crore by 1964.
Financial stress intensified during the militancy years, further expanding the state’s borrowing requirements. Although the Centre provided partial relief by waiving certain liabilities, the measures were limited in scope.
Finance Minister Harpal Cheema said the present government had been compelled to raise fresh loans primarily to service past debt. He stated that nearly 85% of the borrowings undertaken during the current administration have been utilised to repay inherited liabilities. The government has already repaid around 35% of the principal component of earlier loans, he added.
The minister also pointed to reduced central support as an added challenge. According to official figures from the first 10 months of the ongoing financial year (April–January), grants from the Centre have declined. During the previous Congress regime, Punjab received Rs 72,340 crore as GST compensation cess, whereas the current government has secured Rs 27,832 crore under the same head.
The state has additionally cleared Rs 8,000 crore in pending dues related to the implementation of the Pay Commission, further adding to financial pressure.
With debt levels rising and revenue streams under strain, fiscal management remains a key concern for the state government in the months ahead.
- PTC NEWS
