CHANDIGARH, July 1 — The Punjab government will raise ₹8,500 crore in fresh loans during the second quarter of the ongoing fiscal year (July–September), pushing the state closer to a projected total debt of ₹4 lakh crore by the end of March 2026.
According to official sources, the Reserve Bank of India (RBI) has approved the market borrowings, which will be raised in phases — ₹2,000 crore in July, ₹3,000 crore in August, and ₹3,500 crore in September. This comes on top of ₹6,241.92 crore already raised in April and May, taking the total borrowing so far this fiscal year to ₹14,741.92 crore.
The state plans to raise ₹34,201.11 crore in loans during the entire fiscal year. If projections hold, Punjab’s debt burden will rise to approximately ₹4 lakh crore by March 2026 — amounting to a per capita debt of ₹1.33 lakh, assuming a population of 3 crore.
A senior official in the state Finance Department said the borrowings are well within the limits prescribed by the RBI. “We are raising loans at the lowest prevailing market interest rates,” the official said.
As of March 2024, Punjab’s total outstanding debt stood at ₹3.82 lakh crore — over 44% of its Gross State Domestic Product (GSDP). A report tabled in Parliament earlier this year by Union Minister of State for Finance Pankaj Chaudhary flagged Punjab as the state with the second-highest debt-to-GSDP ratio in the country.
The financial pressure is compounded by a widening revenue deficit. In just the first two months of the fiscal year, the state reported a deficit of ₹5,513.65 crore, with revenue receipts at ₹12,903.04 crore and revenue expenditure touching ₹18,416.69 crore.
Eminent economist Prof R.S. Ghuman acknowledged that the borrowings were within permissible RBI limits but warned against the mounting debt load. “The government must urgently craft a roadmap to reduce this debt in the medium and long term,” he said. “Without that, there will be little fiscal space for asset creation or developmental investment. Punjab’s investment-to-GDP ratio already lags behind the national average, highlighting a serious investment deficiency.”
Despite efforts to manage debt through low-interest borrowing, analysts caution that the real challenge lies in improving the state’s fiscal discipline and revenue generation. As Punjab edges closer to a critical debt threshold, long-term reforms may be the only path to sustainable financial health.
