The financial condition of the Punjab government is weak, the government is paying off the installments and interest of old loans by taking loans. More than 20% of the loans taken during the three and a half years of its tenure were spent on electricity subsidy.
SNPNEWS UPDATE 2025: Punjab government to take another loan of Rs 8500 crore, amid claims of surplus, government took a loan of Rs 95000-132000 crore in three and a half years The Punjab government is planning to take another loan of Rs 8500 crore from July to September 2025 after the approval of the Reserve Bank of India (RBI).
This loan will be taken from the market, which includes Rs 2,000 crore in July, Rs 3,000 crore in August and Rs 3,500 crore in September. With this, the total loan taken by the government in the current financial year will be Rs 14,741.92 crore, as a loan of Rs 6,241.92 crore has already been taken in April and May.
● When the Aam Aadmi Party government was formed in 2022, Punjab’s debt was Rs 2.83 lakh crore.
● 2022-23 financial year: The government raised a debt of Rs 32,447.11 crore.
● 2023-24 financial year: In the entire financial year, the total debt of Punjab increased by Rs 29,582 crore.
● 2024-25 financial year: (April 2024 to date): The government raised a debt of Rs 21,119 crore.
● The Punjab government is preparing to raise a debt of Rs 3,500 crore (in September, Rs 2,000 crore in October, Rs 3,000 crore in November-December).
● By the end of the year, the total debt is likely to reach Rs 3.80 lakh crore.
The government aims to take a loan of Rs 34,201.11 crore this year, due to which Punjab’s total loan could reach close to Rs 4 lakh crore by March 2026.
This loan is within the RBI’s sanctioned limits and is being taken at the lowest interest rates. However, Punjab’s debt-GSDP ratio is over 44%, the second highest in the country, raising concerns about the fiscal position.
Opposition parties, such as the Congress and the BJP, have accused the government of fiscal mismanagement and pushing the state into a debt trap.
Punjab Finance Minister Harpal Singh Cheema has said that these loans are being taken as per RBI guidelines and to meet the financial needs of the state. He also mentioned that the government has also invested Rs 2,000 crore for the development of the state during its tenure.
He further said that the government has also taken some important steps to improve the fiscal position of the state, such as increasing the collector rates of property registration and road tax on vehicles, which is expected to generate an additional revenue of Rs 3,000 crore annually.
When the Aam Aadmi Party (AAP) government came to power in Punjab in March 2022, the state’s total debt was around Rs 2.83 lakh crore. After this, the government continued to borrow to meet financial needs and for development works.
Most of the debt was used for servicing past loans (principal and interest payments), salaries, pensions, and subsidies (especially power subsidy, which was Rs 20,243.76 crore in 2023-24).
Limited funds were used for development works and capital expenditure, as capital expenditure was kept at Rs 7,400 crore in 2024-25.
Punjab’s debt-GSDP ratio is 46.6%, the second highest in the country. Opposition parties, such as the Congress and the BJP, accused the government of fiscal mismanagement and pushing the state into a debt trap.
The government has responded by saying that it is handling the debt inherited from previous governments and is trying to reduce interest rates from 11-12% to 7%.
The government increased stamp and registration, GST, and excise revenue, taking the state’s own tax revenue to Rs 47,252 crore in 2023-24. Despite this, the reduction in central grants (from Rs 14,314 crore to Rs 11,748 crore in 2023-24) has increased the fiscal pressure on the government.