The Central Government has reduced Punjab’s open market borrowing limit by a big amount. Punjab had asked for permission to borrow Rs 47,076 crore, but the Centre has cut Rs 16,676 crore from it.
The Union Finance Ministry’s Department of Expenditure has informed the Punjab government and also sent a letter to the Reserve Bank of India about this cut. Punjab has now been allowed to borrow only Rs 21,905 crore for the April to December period, instead of the Rs 35,307 crore it had asked for.
For the full financial year, Punjab wanted to borrow Rs 51,117 crore. This amount included loans from institutions like NABARD and SIDBI, and money from state funds. But the Centre has reduced this amount due to several unpaid dues by the state.
These include:
-Rs 5,444 crore in unpaid power subsidy
-Rs 4,107 crore in subsidy arrears
-Rs 4,151 crore in extra borrowings related to the power sector
-Rs 1,976 crore from previous years’ power loans
Punjab’s Finance Minister Harpal Cheema said this move is like “financial strangulation” of the state. He accused the Centre of targeting Punjab unfairly and said this is happening even though the state is following rules like routing all funds through the consolidated fund.
Punjab’s total debt is expected to reach Rs 4.17 lakh crore by the end of 2025-26. Most of the money Punjab is allowed to borrow this year will be used to repay old loans and pay interest:
-Rs 18,198 crore to repay old loans
-Rs 24,995 crore for interest payments
Punjab expects to earn Rs 1.11 lakh crore this year, but its expenses will be Rs 1.35 lakh crore, leading to a revenue deficit of Rs 23,957 crore.
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