Punjab: Massive jolt to cash-starved AAP govt as Centre slashes borrowing limit by Rs 16,676 cr
PTC News Desk: In a major setback to the AAP-led Punjab Government, the Centre has reduced open market borrowing limit of the state. Against the limit of Rs 47,076. 40 crore sought by the state government, a cut of Rs 16,676 crore has been imposed. A letter has been issued to the Reserve Bank of India by the Department of Expenditure in the Union Ministry.
According to official communication received from the Union Ministry of Finance’s Department of Expenditure, Punjab had requested a borrowing ceiling of Rs 47,076.40 crore for the current fiscal year. However, the Centre has approved a reduced borrowing capacity of Rs 30,400 crore, with formal intimation sent to the Reserve Bank of India (RBI) and the Punjab Government.
For April to December 2025 period alone, Punjab had projected a borrowing requirement of Rs 35,307 crore. Against this, the Centre has allowed just Rs 21,905 crore – nearly a 38% cut. The total gross borrowing limit proposed by the state for 2025–26 was Rs 51,117 crore, which included components such as loans from financial institutions like NABARD and SIDBI, along with transfers from the state’s provident fund and public accounts.
Sources say the significant reduction came from pending liabilities in the power sector. These include: Rs 5,444 crore in unpaid power subsidies, Rs 4,107 crore in arrears related to previous subsidies, Rs 4,151.60 crore in additional borrowing linked to power sector reforms and Rs 1,976 crore from power sector borrowings carried over from previous years.
Punjab Finance Minister Harpal Singh Cheema has described termed the move as an act of “financial strangulation” by the Central Government.
The borrowing cut comes at a time when Punjab is under immense fiscal pressure. The state's outstanding debt is projected to touch Rs 4.17 lakh crore by the end of 2025–26.
- PTC NEWS
