The Punjab government has strongly defended its fiscal management amid intense political opposition, revealing that it has paid out more in debt servicing over the past 50 days than it has raised through new market loans. This financial disclosure from the Aam Aadmi Party (AAP) administration comes in response to allegations from opposition parties that a fresh loan of ₹2,500 crore raised on Wednesday is pushing the state deeper into a financial crisis.
Net Negative Borrowing Position
Punjab Finance Minister Harpal Singh Cheema stated that while the state borrowed ₹5,300 crore during April and May, it simultaneously paid out ₹5,845 crore to service legacy debts. This leaves the government in a net-negative borrowing position of ₹545 crore for the period. Cheema emphasized that the state government is borrowing within the projections made in the budget.
Addressing the Debt Legacy
Cheema pointed out that inherited debt interest payments alone consumed ₹2,645 crore over the last two months. He stated, "The opposition parties left behind a massive debt legacy that we are tackling effectively." The minister's remarks underline the government's strategy of prioritizing debt servicing while maintaining essential expenditures.
Details of the New Loan
The ₹2,500 crore loan raised on Wednesday through the sale of state government securities received the required central clearance. Officials described the transaction as a routine liquidity exercise, noting that the funds will be used to support ongoing capital expenditure and development projects across the state.
Budgetary Projections and Fiscal Discipline
Under the state budget for 2026-27, Punjab's total outstanding debt is projected to rise to ₹4,47,754 crore by March 31, 2027. To manage this liability, the administration has capped net annual borrowing at ₹38,471 crore, positioning the fiscal deficit at 4.08% of the gross state domestic product (GSDP). Treasury officials are relying on a projected 10% nominal GSDP growth target to stabilize the state's total debt-to-GSDP ratio at 45.13%.
Ensuring Welfare and Development
Despite the fiscal constraints, the government maintains that essential welfare schemes and infrastructure development remain fully funded. The finance minister reiterated that the borrowing strategy is aligned with budgetary projections and aims to ensure sustainable economic growth while addressing the debt burden inherited from previous administrations.
