Punjab nearly exhausts its borrowing limit of Rs 38,830 cr

The Punjab Government nearly exhausted its total borrowing limit for 2024-25 by February 28. Of the Rs 38,852 crore allowed as open market borrowings, Punjab has already borrowed Rs 38, 830 crore. Now, the state can raise just Rs 22 crore in the last month of this fiscal.

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This was disclosed by Minister of State for Finance, Pankaj Chaudhary, in a reply to a question posed by Rajya Sabha Member Satnam Singh Sandhu, who had sought details about the details of borrowings during the previous and current year along with the steps taken to check the burgeoning debt crisis in states.

Can raise just Rs 22 cr this month

Of Rs 38,852 crore allowed as open market borrowings, Punjab has already borrowed Rs 38,830 crore. Now, the state can raise just Rs 22 crore in the last month of this fiscal

The data presented in the Rajya Sabha also revealed that in the last fiscal, too, Punjab availed nearly 100% of its borrowing limit by raising Rs 42,386 cr through open market borrowings

The statewise data presented in the Rajya Sabha also revealed that in the last fiscal, too, Punjab availed nearly 100 per cent of its borrowing limit. Against a limit of Rs 42,387 crore set in 2023-24, the state government raised Rs 42,386 crore through open market borrowings. This shows that the borrowing limit of the state reduced by Rs 3,535 crore between the last fiscal and the ongoing one.

Sources in the state Finance Department say there were several reasons for this, including the reduction in the borrowing limit of the state from 3.5 per cent of the Gross State Domestic Product (GSDP) in 2022-23 to 3 per cent of GSDP this year. “Since the GSDP has grown, this reduction has not had much impact. The major reason for the reduction in limit by Rs 2,387 crore has been the state’s inability to recoup the losses incurred by Punjab State Power Corporation Limited, even after the state subscribed to the UDAY scheme in 2016. Though the state government has been pursuing the matter, it has not been solved,” said an official in the Finance Department.

It is learnt that many states were allowed an additional borrowing of up to 0.50 per cent of GSDP this year, based on certain performance criteria in the power sector. Punjab, however, has not been allowed this additional borrowing limit, confirmed the official.

In his written reply, Chaudhary also said: “It was decided and communicated to the states in March 2022 that borrowings by state public sector companies or corporations, special purpose vehicles and other equivalent instruments, where principal and interest are to be serviced out of the state Budget and/or by assignment of taxes or cess, or any other state’s revenue, shall be considered as borrowings made by the state itself."