Punjab on the Brink of Bankruptcy: NAPA Raises Alarm Over Fiscal Crisis and Flood Vulnerability
North American Punjabi Association (NAPA) has expressed grave concern over the deteriorating financial condition of Punjab, warning that the state is on the brink of bankruptcy due to unsustainable debt levels and disproportionately high operating expenses. According to the latest 2024–25 revised budget estimates, nearly one-third of Punjab’s total budget—amounting to ₹84,116 crore—has been earmarked solely for the repayment of public debt. The state’s overall debt burden is now reported at a staggering ₹3.75 lakh crore.
In addition, almost 60% of the state’s finances are being consumed by salaries, pensions, subsidies, and interest payments. NAPA has cautioned that such spending patterns leave very little room for developmental activities. Shockingly, less than 5% of the total budget, or just ₹8,346 crore, has been allocated to capital expenditure.
“This imbalance in financial management is extremely dangerous for Punjab’s future,” said Satnam Singh Chahal, Executive Director of NAPA. “With such a huge share of resources being drained by debt servicing and routine government expenses, the state is left with virtually nothing to invest in critical infrastructure. This is not only crippling Punjab’s growth but also leaving millions of people exposed to the devastation of floods.”
NAPA highlighted that effective flood prevention requires large-scale investment in embankments, drainage networks, reservoirs, and early-warning systems—projects that fall under capital expenditure. With CapEx reduced to less than 5% of the budget, Punjab lacks the financial capacity to undertake such works. Instead, the state continues to rely heavily on post-disaster relief, which is both costly and unsustainable.
In the short term, NAPA has recommended urgent steps such as targeted desilting of drainage channels, leasing of pumps and barriers, and strengthening community-level warning and evacuation systems. The organization stressed that even with limited resources, the government must prioritize preventive measures to reduce loss of lives and property during monsoon flooding.
For the medium and long term, NAPA has urged the Punjab government to rebalance its spending by rationalizing subsidies, moderating pension and salary burdens, and creating a dedicated “Flood Resilience Fund.” The association also called for exploring concessional finance from NABARD, World Bank, and Asian Development Bank, along with attracting private capital for urban drainage and stormwater management projects.
“Unless Punjab takes bold measures to restructure its debt, broaden its tax base, and increase its capital expenditure, the state will remain trapped in a cycle of fiscal stagnation and disaster vulnerability,” Chahal warned. “NAPA strongly urges both the state government and the central government to act swiftly before Punjab’s economic health and the safety of its citizens are put at even greater risk.”
NAPA concluded that Punjab’s future depends on reversing the current trend where over 90% of resources are absorbed by debt repayment and operating costs, leaving barely any room for development. The association stressed that sustainable financial management and urgent investment in flood resilience infrastructure are the only ways forward.