Punjab raising more loans to meet expenditure as debt burden mounts

Ruchika M Khanna

Chandigarh, March 3

Punjab’s public debt is burgeoning at its seams. So much so that the state has had to raise more loans to meet its expenditure as committed liabilities of wages, pension, repayment of loans and power subsidy eat into its revenue receipts. As a result, there is very limited money available with the state government to undertake any major development work.

According to figures available with The Tribune, Punjab’s debt has increased by Rs 59,994.29 crore between April 2022 and January 2024. A debt of Rs 30,899.81 crore was added to the state’s already burgeoning debt burden in 2022-23, while a loan of Rs 29,094.48 crore has been taken by the government in the first 10 months of the ongoing fiscal.

As the state government prepares to announce its budget proposals for 2024-25 on Tuesday, the fiscal indicators reveal that the total outstanding debt on Punjab has zoomed from Rs 2.73 lakh crore in March 2022 to Rs 3.33 lakh crore till January 2024. The state’s debt to GSDP ratio, according to a recent RBI report, is 47.6 per cent, which is the second highest in the country.

From Rs 18,909.39 crore being paid towards interest on this outstanding debt in 2021-22, the interest to be paid on 2023-24 will be Rs 22,000 crore, of which Rs 15,702.68 crore has been paid between April 2023 to January 2024. With the state’s total revenue receipts from April 2023-January 2024 being Rs 69,490.29 crore, a whopping 22.59 per cent of this earning is going only towards paying interest on loans.

Other than this, 57.6 per cent of the total revenue receipts in the first 10 months of the ongoing fiscal (Rs 40,085.82 crore) have gone towards paying salaries and pensions. A whopping 25.14 per cent of the state’s revenue (Rs 17,471.90 crore) has also gone into paying the power subsidy. This committed expenditure alone is over and above the state’s revenue receipts. For all other expenditure, the state government is forced to raise loans and use funds from its capital receipts (which have touched Rs 29,116.48 crore in 10 months).

No wonder, that the total money spent by the state government on building infrastructure is minimal. The total capital expenditure so far this year is just Rs 3,393.05 crore, which is just 3.44 per cent of the total receipts of the government in the first 10 months of 2023-24 financial year. Though officials in the Finance Department say that the spending on capital account (to build long-term assets) has increased over the previous years, they are giving it a push now.

Meanwhile, the Finance department has directed all departments to return all unused funds lying with them back to the Treasury. Only the funds allotted for the centrally sponsored schemes can be held back by the departments.