Punjab Finance Minister Details Fiscal Recovery and Enhanced Borrowing Capacity
In a comprehensive review of the state's financial trajectory, Punjab Finance Minister Harpal Singh Cheema outlined on Thursday how the Aam Aadmi Party (AAP) government has leveraged stronger financial reserves and implemented stricter treasury controls to secure improved borrowing terms. He emphasized that these fiscal stabilization efforts are proceeding alongside the continuation of the government's welfare commitments, ensuring a balanced approach to public finances.
Substantial Growth in Financial Reserves
Presenting what he described as a four-year account of Punjab's "fiscal recovery," Cheema highlighted the significant strengthening of key financial buffers. The Consolidated Sinking Fund (CSF), a critical reserve for debt repayment, has seen remarkable growth, increasing from Rs 2,980 crore under the previous Congress government to Rs 10,738 crore as of December 2025. Similarly, the Guarantee Redemption Fund (GRF), which previously had no balance, has been built up to Rs 990 crore, providing an additional financial cushion for the state.
Improved Borrowing Terms and Access to Credit
According to Cheema, this enhanced reserve position has directly translated into better borrowing conditions for Punjab. The state has secured a Rs 6,000-crore soft borrowing limit, facilitating more favorable loan terms. Over the last four years, Punjab has also availed Rs 8,900 crore in short-term loans to manage liquidity needs. Notably, the state has gained access to a credit line at interest rates that are 2 percentage points below the repo rate, representing a significant cost-saving advantage in its borrowing strategy.
Treasury Controls and Fraud Prevention Measures
To prevent treasury-related irregularities and improve oversight of public deposits, the government introduced the e-Deposit Management System (EDMS) in 2022. Cheema stated that this digital system aims to avoid financial frauds similar to recent incidents, such as the Rs 645-crore fraud involving Haryana government funds at a private bank in Chandigarh. He reported that the private bank associated with Punjab has already reconciled 95% of its accounts, demonstrating progress in financial transparency and accountability.
Historical Context and Pension Scheme Considerations
Cheema provided historical context, noting that the previous Congress government inherited a shut treasury in March 2017. This occurred when the outgoing Shiromani Akali Dal-Bharatiya Janata Party (SAD-BJP) government defaulted on an overdraft, leading to the suspension of state treasury operations and takeover by the Reserve Bank of India (RBI).
In response to queries regarding the old pension scheme (OPS), Finance Minister Cheema clarified that the matter remains under active consideration following the central government's introduction of the Unified Pension System (UPS). He explained that two dedicated committees—one headed by himself and another by the chief secretary—are working to identify a viable solution to this issue, ensuring thorough evaluation before any decision is made.
Overall, Cheema's statements underscore a strategic focus on fiscal discipline, enhanced financial reserves, and improved borrowing mechanisms, all while maintaining the government's social welfare agenda for Punjab's development.
