Punjab government seeks increase in debt limit amid financial struggles

Chandigarh: The Punjab government has formally requested a significant increase in its borrowing limit for the current financial year, citing a severe financial crisis. In a letter to the Union Finance Ministry, the state government has asked for an additional ₹10,000 crore in debt capacity to manage its mounting expenses.

The current debt ceiling for Punjab in the 2024-25 financial year is set at ₹30,464.92 crore, out of which the government has already borrowed ₹13,094 crore by July. However, officials believe that this limit is insufficient to cover the state’s financial obligations, prompting the request for an extension.

Last year, the central government had reduced Punjab’s borrowing limit by ₹2,387 crore, further straining the state’s finances.

The state government argues that it is burdened by loans inherited from previous administrations, with a substantial repayment obligation of ₹69,867 crore. Of this, ₹23,900 crore is earmarked solely for loan and interest repayments.

To address the ongoing financial crisis, the Punjab government has already implemented several measures, including cutting subsidies on electricity, increasing fuel prices, and imposing a green tax to boost revenue. Despite these efforts, the state continues to face challenges in meeting its financial commitments, including timely payment of employee salaries.

In an August cabinet meeting, the decision to write to the Union Finance Ministry was approved, with the state now awaiting a response to its urgent plea.