Punjab debt rises to ₹4.47 lakh crore since 1996

Punjab’s debt has surged from ₹15,250 crore in 1996 to an estimated ₹4.47 lakh crore by the end of 2026-27, according to Congress MP Manish Tewari. He blamed “populist and profligate spending” by successive governments over the last three decades for the state’s worsening financial health.

Tewari shared a series of posts on X, highlighting the state’s debt stood at ₹15,250 crore in 1996 and doubled to ₹32,496 crore by 2002. The debt, he said, is not militancy-related but a consequence of populist and profligate spending over the past 30 years by successive governments.

The state’s debt is projected to touch ₹4.47 lakh crore by the end of the 2026-27 financial year. Since the early 1990s, Punjab has alternated largely between the Shiromani Akali Dal-BJP alliance and the Congress. The Aam Aadmi Party came to power in 2022.

The Akali Dal-BJP alliance governed from 1997 to 2002, followed by Congress under Amarinder Singh from 2002 to 2007. The Akali Dal-BJP coalition returned and completed two consecutive terms between 2007 and 2017 under Parkash Singh Badal. Congress came back to power in 2017 under Amarinder Singh before leadership changes brought Charanjit Singh Channi to the chief minister’s post.

Tewari said Punjab’s finances have reached a point where borrowings are being used to service existing debt instead of funding development. About 23% of the state’s revenue receipts, amounting to ₹28,755 crore, will go towards interest payments. Debt servicing, including repayment of principal and interest, stood at ₹43,194 crore in 2025-26.

In effect, the state is borrowing to pay interest on existing debt rather than spend on development, Tewari said. Punjab’s debt-to-GSDP ratio stood at 46.6% as of March 31, 2025, making it the second highest in the country.

Punjab had the second highest debt-to-GSDP ratio in the country as of May 31, 2025. Tewari added that the situation is much worse.

Tewari stated that as of March 31, 2025, the debt-to-GSDP ratio of Punjab stands at 46.6%, still the second-highest in the country. Highlighting the pressure on the state’s finances, Tewari said Punjab’s annual debt servicing cost is around ₹42,481 crore.

This amount is more than 23% of the state revenues. For every one Rupee of revenue generation by Punjab, 23 Paisa go towards only debt servicing. The Congress leader added that after meeting revenue expenditure and debt obligations, only about 5.6% is left for capital expenditure that creates long-term assets.

Only 5.6% is left for capital expenditure.

Tewari argued that Punjab must rethink its fiscal priorities. Punjab has to stop doling out freebies. The state just can’t afford it.

Tewari’s warning that Punjab cannot afford to continue doling out freebies is a stark reminder of the need for fiscal discipline and responsible governance.