Cash-strapped Punjab seeks additional loan limit of Rs 10,000 crore amid financial crunch
PTC Web Desk: Amid a severe financial crunch, the Punjab Government, led by the AAP, has requested an additional borrowing limit of Rs 10,000 crore for the current fiscal year. The state, facing challenges in managing its expenses, has reportedly sent a formal letter to the Union Finance Minister, seeking an increase in the approved borrowing limit for 2024-25, which currently stands at Rs 30,464.92 crore.
As per reports, out of this approved limit, the Punjab Government has already borrowed Rs 13,094.34 crore by the end of July. The state is grappling with a significant debt burden inherited allegedly from previous governments and has argued that it requires additional funds to meet its financial obligations.
For the current fiscal year, the state government has a total repayment obligation of Rs 69,867 crore, a large portion of which includes interest payments on previous loans. In fact, approximately Rs 23,900 crore from the state's receipts this year is earmarked solely for interest payments on its accumulated debt.
Despite an increase in revenue receipts over the years, the state's expenditure has grown at a much faster pace. Additionally, last year, the Centre reduced Punjab's borrowing limit due to its failure to reduce the losses of the Punjab State Power Corporation Limited (PSPCL), despite its participation in the UDAY scheme. This resulted in a Rs 2,387 crore reduction in borrowing limit and a Rs 1,807 crore cut in capital assistance.
Moreover, the state has claimed that the Centre still owes it Rs 8,500 crore in dues. The fiscal crisis led to a delay in salary payments for August, which were released four days late in September.
In response to the financial strain, the Punjab Government has implemented several measures to boost revenue, including raising collector rates for property registration, increasing VAT on fuel, and withdrawing subsidized power for domestic consumers with loads up to 7 KW. The government also raised bus fares, with expectations of generating an additional Rs 150 crore annually. Overall, these measures are aimed at increasing revenues by Rs 3,000 crore per year.
- With inputs from our correspondent
