Punjab has incurred a significant revenue loss exceeding Rs 2,178 crore in the first month of the current fiscal year. With concerns over the continued borrowing limit cuts imposed by the Centre last year, the AAP government faces difficulties in fulfilling its development promises. The implementation of the model code of conduct since March has further hampered the state government’s efforts to meet its revenue targets, as highlighted by the financial indicators for April 2024.
In April, the state earned Rs 6,487.20 crore, amounting to just 6.24 per cent of the revenue target for 2024-25. Meanwhile, the expenditure surged to Rs 8,665.31 crore, with a grant of only Rs 266 crore from the Centre. Additionally, Punjab borrowed Rs 2,307.45 crore in April alone. The state’s outstanding debt, as of March 2024, stands at an unsustainable Rs 3.43 lakh crore, with a debt-to-GSDP ratio of 44.05 per cent.
A meeting of the Finance Department, chaired by Finance Minister Harpal Singh Cheema, was convened to review the state’s financial position. The meeting delved into issues such as slow revenue growth, high expenditure, and escalating debt. Concerns were raised about the potential continuation of the borrowing limit reduction by the Centre, which would severely restrict the financial capacity of the AAP government to undertake development projects.
Last year, the Centre reduced Punjab’s total borrowing limit by approximately Rs 1,800 crore due to violations of capital expenditure norms. The Punjab State Power Corporation Limited was also asked to bear a loss of Rs 2,400 crore, adjusted against the state’s borrowing limit under the UDAY scheme. Additionally, off-budget borrowings faced a Rs 300 crore cut. These reductions were separate from pending receipts from the Centre, including Rs 800 crore under the National Health Mission and Rs 6,200 crore due as market fees and the rural development fund.
With these financial constraints, the AAP government faces an uphill battle to balance its budget while striving to meet its development promises.
