At pre-Budget meet, Cheema seeks special fiscal package from Centre

Punjab Finance Minister Harpal Singh Cheema on Saturday pressed the Union government for an urgent special fiscal package, warning that the border state has been hit by a “double whammy” of prolonged border tensions with Pakistan and one of the worst flood disasters in decades last year.

During a pre-Budget meeting with Union Finance Minister Nirmala Sitharaman, Cheema submitted a detailed memorandum ahead of the Union Budget 2026-27, arguing that Punjab’s financial stress must be viewed through the lens of national security and climate vulnerability.

Describing Punjab as the country’s first line of defence, Cheema said sustained tension along the International Border had disrupted economic activity before devastating floods battered the state. “The monsoon disaster, later classified by the Ministry of Home Affairs as a calamity of severe nature, affected over 2,300 villages and nearly 20,000 families. Official assessments have pegged the total damage at Rs 12,905 crore,” he said.

To manage recovery, Cheema sought permission for a one-time additional borrowing of 1% of Gross State Domestic Product in 2025-26 under the Fiscal Responsibility and Budget Management (FRBM) Act provisions for emergencies. “Punjab needs fiscal flexibility to rebuild after an extraordinary year,” he told the Centre.

Flagging growing security challenges, the Finance Minister demanded a Rs 1,000 crore Central grant for police modernisation, emergency response systems and advanced anti-drone technology to counter cross-border threats and drug trafficking. He said such support should be seen as cooperative federalism, not special treatment.

Cheema also urged the Centre to immediately release Rural Development Fund dues of Rs 7,757 crore, warning that rural roads and infrastructure were suffering due to the freeze. On agriculture, he pushed for a sharper shift away from water-guzzling paddy cultivation, seeking to double diversification incentive to Rs 15,000 per acre to protect Punjab’s fast-depleting groundwater.

On GST, the state minister said Punjab continued to suffer a structural revenue shock after GST 2.0, losing nearly Rs 6,000 crore annually, about 44% of its own tax revenue. He called for a predictable compensation or stabilisation mechanism to protect state finances.

The Finance Minister also opposed the proposed changes to MGNREGA, arguing that the new framework weakened the employment guarantee and shifted financial burden onto states. He flagged cuts in the National Health Mission funding, seeking restoration of the original Rs 452.78 crore allocation, which was reduced to Rs 252 crore.

Concluding his submission, Cheema said Punjab’s case was not merely fiscal but national in character. “A border state recovering from security pressure and climate shocks cannot be left to fend for itself,” he said, urging the Centre to reflect the true spirit of cooperative federalism in the Budget.