Punjab's Finance Minister, Harpal Singh Cheema, has made a strong appeal to the central government for a special economic package to help the state recover from a devastating year marked by severe border tensions and catastrophic floods. The plea was formally submitted during a pre-Budget consultation with Union Finance Minister Nirmala Sitharaman in New Delhi on Saturday.
Double Blow: Border Tensions and Unprecedented Floods
Cheema underscored Punjab's unique position as the nation's first line of defence, which led to significant economic disruption due to prolonged security tensions along the India-Pakistan border. This crisis was immediately followed by what he described as the worst floods in decades, officially declared a "calamity of severe nature" by the Ministry of Home Affairs.
The scale of the monsoon disaster is staggering. According to ground-level assessments, the floods impacted more than 2,300 villages and affected close to 20,000 families across Punjab. The finance minister pegged the total estimated damage at a colossal Rs 12,905 crore.
To manage the massive task of rehabilitation and reconstruction, Cheema formally requested a one-time additional borrowing limit of 1% of the state's GSDP for the fiscal year 2025-26. This flexibility is sought under the provisions of the Fiscal Responsibility and Budget Management (FRBM) Act, which allows for such measures during natural disasters and national security emergencies.
Key Financial and Policy Demands for Union Budget
The memorandum presented to the Centre outlines a comprehensive list of demands addressing security, revenue loss, and rural development.
Highlighting urgent security needs, Cheema sought a special central assistance of Rs 1,000 crore. This fund is intended for modernising the state police force, strengthening emergency response systems, and deploying advanced anti-drone technology to counter cross-border threats and narcotics smuggling effectively.
A major point of contention is the state's revenue situation post-GST reforms. Cheema pointed out that Punjab is suffering an annual revenue loss of nearly Rs 6,000 crore following the implementation of GST 2.0, which amounts to roughly 44% of its own tax revenue. He pressed for a predictable GST stabilisation or compensation mechanism for states facing such structural erosion.
The minister also flagged the issue of withheld Rural Development Fund (RDF), urging the immediate release of Rs 7,757 crore pending up to June 2025.
Focus on Agriculture Diversification and Social Schemes
On the agricultural front, Cheema stressed the critical need to shift away from water-intensive crops like paddy. He argued that the current incentive for diversification is inadequate and proposed a special budgetary allocation to increase it to Rs 15,000 per acre from the existing Rs 7,500 to encourage genuine change among farmers and preserve groundwater.
Cheema expressed strong opposition to the proposed changes in the MGNREGA framework, stating that the new model dilutes the employment guarantee and places a heavy financial burden on states. He called for the restoration of the scheme's original demand-driven structure and funding pattern.
Regarding public health, the minister drew attention to a sharp reduction in the National Health Mission (NHM) cash allocation for Punjab for 2025-26, which was cut from the communicated Rs 452.78 crore to just Rs 252 crore. He requested the restoration of the original allocation to ensure essential health services are not disrupted.
In his concluding remarks, Cheema expressed hope that the upcoming Union Budget would embody the spirit of cooperative federalism by addressing Punjab's distinct challenges as a border state grappling with the twin crises of security pressures and climate-induced disasters.
Summary of Key Demands:
- Disaster & GST: FRBM relaxation for borrowing; GST compensation for ~Rs 6,000 crore annual loss.
- Security: Rs 1,000 crore grant for police modernisation and anti-drone tech.
- Agriculture: Increase paddy diversification incentive to Rs 15,000/acre; release pending RDF of Rs 7,757 crore.
- Water & Floods: Budgetary support for canal projects; operational control of BBMB dams in monsoon.
- Social Schemes: Restore original MGNREGA structure; reinstate NHM allocation to Rs 452.78 crore.
- Power Sector: Reinstatement of 20% rail freight concession on coal.
