9 september 2024 : To cover its expenses, the financially strained Punjab government has requested an additional borrowing limit of Rs 10,000 crore for the current fiscal year.
The state has sent a formal request to the Union Finance Minister seeking this increase beyond the existing borrowing cap of Rs 30,464.92 crore. So far, Rs 13,094.34 crore of this limit has already been utilized as of July.
Punjab’s government has cited a significant inherited debt from previous administrations that it must repay. This year alone, the state needs to repay Rs 69,867 crore, with Rs 23,900 crore of its revenue earmarked solely for paying interest on loans.
Although revenue receipts have been rising, expenditures have increased even more rapidly. Last year, the central government reduced the state’s borrowing limit due to its inability to reduce losses of the Punjab State Power Corporation Limited (PSPCL), despite the implementation of the UDAY scheme and cuts in capital assistance grants.
Additionally, Punjab is owed Rs 8,500 crore by the Centre. In September, the state delayed August salaries by four days due to financial constraints.
The request for an increased borrowing limit was decided at a Cabinet meeting in August. The government has also raised property registration fees, road taxes, and bus fares, and withdrew subsidies on power for domestic consumers with up to 7 KW load. These measures are expected to generate an additional Rs 3,000 crore annually.
Despite these efforts, the state anticipates that these steps might not suffice. Officials plan to escalate the matter to the Prime Minister’s Office for assistance. They also highlight the discontinuation of GST compensation and a reduction in the revenue deficit grant from Rs 5,618 crore last year to Rs 1,995 crore this year, further straining the state’s finances.