Cash-strapped Punjab’s mounting debt crosses Rs 4 lakh thousand crore, govt borrows Rs 1,000 crore through bond auctions
PTC Web Desk: Punjab’s debt burden has continued its upward trajectory, with the state government recently raising an additional Rs 1,000 crore through bond auctions. This has pushed the state's total outstanding debt beyond Rs 4 lakh thousand crore, raising serious fiscal concerns.
According to official sources, this fresh loan has been taken under the land pooling scheme aimed at funding infrastructure and development projects across the state. The Punjab Government reportedly plans to acquire 24,000 acres of land under this scheme, and the loan will be used to cover associated costs.
Rs 1,000 crore loan raised through 21-year govt stock
As per government documents, the Rs 1,000 crore loan was raised on May 28 through the sale of government stock (bonds) via open market auctions for a period of 21 years, maturing in 2046. The borrowing is intended to support capital expenditure such as development initiatives and other planned schemes. This borrowing was carried out with approval under Article 293(3) of the Indian Constitution, following permission from the Central Government.
Loan raised right after Centre cuts borrowing limit
This borrowing comes shortly after the Union Ministry of Finance reduced Punjab’s borrowing limit. On May 21, a communication from the Centre to the RBI approved a borrowing limit of Rs 21,905 crore for the first nine months of the ongoing financial year. This figure represents a reduction of Rs 16,477 crore from the previously projected borrowing capacity of Rs 38,382 crore for the same period, based on a full-year cap of Rs 51,176.40 crore for FY 2025–26.
Despite the cut, the Bhagwant Mann-led AAP government has now raised approximately Rs 1 lakh crore in loans since coming to power—much of it attributed to fulfilling election promises and funding development projects.
Agricultural sector under severe debt pressure
Alongside the state’s ballooning debt, Punjab’s agricultural sector is also under severe financial stress. According to data released by the Lok Sabha in February 2025, total outstanding agricultural debt in Punjab has surpassed Rs 1 lakh crore, adding another layer to the state's financial distress.
Breakdown of the farm debt is as follows:
Private banks: Rs 85,460 crore
Cooperative banks: Rs 10,000 crore
Regional Rural Banks (RRBs): Over Rs 8,000 crore
This data, sourced from the Reserve Bank of India (RBI) and the National Bank for Agriculture and Rural Development (NABARD), is current as of March 31, 2024.
Average farm household debt: Rs 2.03 lakh
In March 2025, Union Minister of State for Agriculture Ram Nath Thakur presented national farmer debt data in Parliament, placing Punjab third among Indian states in terms of average farm household debt. According to this data, each agricultural household in Punjab carries an average debt burden of Rs 2.03 lakh.
- PTC NEWS
