Punjab, December 18:
The rising debt burden in Punjab has become a major concern for the state government. Despite efforts to reduce the debt, these measures have proven insufficient so far.
Punjab ranks second in India in terms of debt-to-GSDP ratio, standing at 47.6%. The state’s total debt has reached ₹3.51 lakh crore. Arunachal Pradesh surpasses Punjab with the highest debt-to-GSDP ratio of 50.4%. These findings were revealed in the 2023-24 Reserve Bank of India report presented in the Lok Sabha by Union Minister of State for Finance, Pankaj Chaudhary.
Need for New Revenue Sources
In 2019-20, Punjab’s debt stood at ₹2.29 lakh crore, which has now surged to ₹3.51 lakh crore in 2023-24. While the government is working on new roadmaps to address fiscal deficits and the economic crisis, experts suggest that increasing revenue streams is crucial. Additionally, curbing free schemes could help Punjab escape this debt trap.
Punjab was once considered a cash-surplus state in 1986. However, election promises involving free services have plunged the state into economic turmoil. Successive governments, whether led by the Akali-BJP alliance, Congress, or the current Aam Aadmi Party, have been unable to resolve this crisis. In just five years, the state’s debt has increased by over 34%.
Electricity Subsidy: A Major Hurdle
The state government’s biggest financial challenge is the electricity subsidy. While the promise of 300 free units of electricity per connection has been fulfilled, it costs the government around ₹20,000–₹22,000 crore annually. Even the 16th Finance Commission has advised finding alternatives to the electricity subsidy.
If Punjab focuses on enhancing its revenue and controlling expenses, especially subsidies, it might be able to navigate out of this debt crisis.
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