Centre slashes Punjab’s borrowing limit by Rs 16,676 crore
Babushahi Bureau
Chandigarh, May 21, 2025 – In a major financial setback for the Punjab government, the Central Government has reduced the state’s borrowing limit by ₹16,676 crore.
According to a report by The Tribune, Punjab had sought approval for a borrowing limit of ₹47,076.40 crore, but the Centre has approved only ₹30,400.40 crore, cutting the requested amount by a substantial margin.
For the first nine months of the fiscal year 2025–26 (April to December), the Punjab government had asked for a borrowing limit of ₹35,307 crore, but was granted only ₹21,905 crore by the Centre. For the entire ongoing fiscal year, Punjab had proposed a borrowing ceiling of ₹51,117 crore.
Reasons for the Cut
The borrowing limit has been reduced due to the state's non-payment of power subsidies. The Punjab government has not paid ₹5,444 crore in power subsidy dues, while an additional ₹4,107 crore in pending subsidy payments remain unpaid.
Moreover, Punjab has taken new loans amounting to ₹4,151.07 crore related to the power sector, and had also borrowed ₹1,976 crore for similar purposes in the previous fiscal year.
Mounting Debt
At the end of the current financial year, Punjab’s total debt is expected to reach ₹4.17 lakh crore. A major portion of the loans Punjab takes is spent on servicing old debt and interest payments.
This year, the Punjab government must repay ₹18,189.89 crore in old debt, in addition to ₹24,995.49 crore in interest payments.
The state expects to receive ₹1.11 lakh crore in revenue this year, while the estimated expenditure stands at ₹1.35 lakh crore, leading to a projected fiscal deficit of ₹23,957.28 crore.