CHANDIGARH: The AAP led-Punjab government is estimated to borrow around Rs 39,971 crore during this year, taking the State's debt liability to Rs 4,47,754 crore by March 31, 2027.
With the debt-to-gross state domestic product (GSDP) ratio at 45.65 per cent, among the highest in the country, the government will be left with only Rs 11,005 crore to spend on infrastructure and its flagship Mukh Mantri Sehat Bima Yojana.
About 91.28 per cent of the Budget will go towards paying interest on loans, salaries of employees, pensions and power subsidy.
As per the 'Budget at a glance' document tabled by state finance minister Harpal Singh Cheema in the Assembly yesterday, the fiscal deficit is estimated at 4.08 per cent of the GSDP, with the effective revenue deficit pegged at 2.06 per cent.
The revenue deficit for this year is estimated at Rs 21,955.18 crore, while the debt of the State will rise to Rs 44,2604.16 crore.
Thus, sources said Rs 42,481 crore will go in debt servicing, Rs 13,726 crore on debt repayment and Rs 28,755 crore on interest payments.
Against the 2025-26 Budget estimate of Rs 24,995 crore, Rs 27,679 crore had gone in interest payments as per revised estimates for the year, thus 24 per cent of the state’s revenue receipts totalling Rs 16,516 crore was consumed by interest payments.
The government is expected to generate Rs 1,26,190.43 crore as income, of which Rs 1,15,185.40 crore will be spent on its liabilities. Thus, the government will be left with only Rs 11,005 crore to spend on infrastructure building and its flagship Mukh Mantri Sehat Bima Yojana.
This is just 8.72 per cent of the state’s projected revenue receipts for 2026-27. "The remaining 91.28 per cent of the budget will go towards paying interest on loans, salaries of employees, pensions, power subsidy and the newly launched Mukh Mantri Mawan Dhiyan Satkar Yojana," added sources.
As per a study commissioned by the 16th Finance Commission and conducted by the Indian School of Business, the debt of the State shot up from Rs 92,282 crore in 2012-13 to more than 4 lakh crore by March 31, 2026, thus pushing the debt-to-GSDP ratio from 23 per cent to 46 per cent. It is projected that this ratio could rise to 62 per cent by 2030-31.
The high debt-to-GSDP ratio reflects fiscal stress. The interest payments presently consume about 20-25 per cent of the State’s revenue receipts.
“If the present trend continues, the state’s fiscal stress will worsen,” it read.
Sources said that the Gross State Domestic Product (GSDP) is estimated to be Rs 9.80 lakh crore in the next fiscal, and the debt-to-GSDP ratio is likely to be at 45.13 per cent, the same as the current fiscal. Notably, the debt-to-GSDP ratio was 41.62 per cent in 2021-22.
In simple terms, it means that the State’s total debt is growing faster than its economic output. The growth rate of the State has been sliding down, with 7.94 per cent in the present fiscal year.
In 2024-25 it was 9.02 per cent, while in 2023-24 it was 11.36 per cent, in 2022-23 it was 8.38 per cent, and in 2021-22 it was 16.0 per cent.
