The financial health of Punjab has once again become a focal point of intense debate as the cash-strapped Aam Aadmi Party (AAP)-led government announced its decision today, Saturday, July 12, 2025, to raise a substantial loan of Rs 8,500 crore during the second quarter of the current fiscal year, spanning July to September. This latest move brings the total borrowings raised by the state government during the present fiscal year to a staggering Rs 14,741.92 crore, triggering sharp criticism from opposition parties who accuse the government of pushing Punjab towards financial ruin and warn that the state is on the brink of bankruptcy.
According to financial projections, with this new borrowing, the total debt of the state is likely to reach Rs 4 lakh crore by the end of March 2026. Sources within the government indicate that the Reserve Bank of India (RBI) has approved these market borrowings, which will be availed in installments: Rs 2,000 crore in July, Rs 3,000 crore in August, and Rs 3,500 crore in September. During the initial two months of the current fiscal year, April and May, the government had already availed loans amounting to Rs 6,241.92 crore. The government is reportedly mulling raising a total of Rs 34,201.11 crore in loans this year, further exacerbating the state’s financial liabilities. As of March last year, Punjab’s total outstanding debt stood at Rs 3.82 lakh crore, which represents over 44 percent of its Gross State Domestic Product (GSDP), a figure that has raised concerns in reports on debt-stressed states in the country, with Punjab often cited as having one of the highest debt-to-GSDP ratios.
Opposition parties have been quick to pounce on these figures, painting a grim picture of Punjab’s fiscal trajectory. Leader of the Opposition and senior Congress leader Partap Singh Bajwa lambasted the AAP government, asserting that it has “drowned Punjab in debt over its three-year tenure.” He added, “This reckless borrowing shows no regard for the state’s financial health.” Bajwa pointed out that when AAP assumed power in 2022, Punjab’s outstanding debt stood at Rs 2,81,773 crore, and by the end of the 2025-26 fiscal year, the debt is projected to reach Rs 4 lakh crore, with economists estimating it could climb to Rs 4,50,000 crore by 2026-27, the final year of AAP’s term. “The people of Punjab will bear the burden of this massive debt through heavy taxation. The AAP government will vanish from Punjab long before the next assembly elections,” Bajwa claimed, signaling a strong electoral challenge on economic mismanagement.
In defense of its borrowing strategy, an anonymous government official stated, “We are raising loans at the lowest rate of interest prevailing in the market as the borrowings were within the permissible limit set by the RBI.” However, the opposition remains unconvinced, questioning the efficacy of the government’s economic advisors, including former IMF senior economist Arbind Modi as Chief Advisor and former World Bank economist Sebastian James as Adviser (Fiscal Affairs), appointed to revive Punjab’s struggling economy. Bajwa questioned, “Is this the expertise that globally renowned economists are offering the AAP government? Even AAP leader Arvind Kejriwal, who often boasts about his revenue management skills, has failed to support Punjab in its hour of need.” The ongoing debate highlights the precarious financial position of Punjab, with the government balancing the need for development funds against the mounting debt burden, a challenge that will likely define the political discourse in the coming months. This is web generated news web report
