Punjab’s public debt has grown sharply since the financial year 2021-22, reflecting persistent revenue shortfalls and high committed expenditure. At the end of 2021-22, the state’s outstanding debt stood at ₹2,81,773 crore (48.24% of GSDP). By the end of 2022-23, it had risen to ₹3,14,221 crore (46.68% of GSDP). The figure further increased to ₹3,46,185 crore (46.66% of GSDP) at the close of 2023-24 and reached ₹3,82,935 crore (47.30% of GSDP) by the end of 2024-25. According to official projections, the outstanding debt is expected to touch ₹4,17,136 crore (46.80% of GSDP) by the end of 2025-26. In just four years (from end of 2021-22 to projected end of 2025-26), Punjab has added approximately ₹1.35 lakh crore to its debt stock.
The carry-forward mechanism lies at the heart of Punjab’s debt dynamics. In every state budget, the outstanding debt at the close of one financial year automatically becomes the opening balance for the next year. This carried-forward debt forms the base on which fresh borrowings are added and principal repayments are deducted to arrive at the new closing balance. For instance, the entire ₹2,81,773 crore debt at the end of 2021-22 was carried forward into 2022-23. Similar carry-forward occurs every year — the ₹3.14 lakh crore at end of 2022-23 became the opening liability for 2023-24, and so on. This legacy debt continues to accumulate because the state has been running persistent revenue and fiscal deficits, forcing it to borrow even for meeting current expenditure.High repayment burden on carried-forward debt has become a major strain. In the 2025-26 budget, Punjab has budgeted gross borrowings of ₹1,21,150 crore while planning to repay ₹89,449 crore in principal alone. This means a large portion of new borrowing is essentially used to service or roll over the massive carried-forward debt from previous years. Interest payments on this accumulated stock consume over 20% of the state’s revenue receipts, leaving very limited fiscal space for developmental spending. The net addition to debt each year (around ₹32,000–₹34,000 crore in recent years) is added on top of this already heavy carried-forward burden.
This pattern of continuous carry-forward combined with fresh borrowing has pushed Punjab’s debt-to-GSDP ratio among the highest in the country and placed it in the “aspirational” category in NITI Aayog’s Fiscal Health Index. Without meaningful correction in revenue mobilisation and expenditure rationalisation, the carried-forward debt will keep growing, further crowding out capital expenditure and weakening long-term governance and development prospects.These figures are drawn from official state budget documents, PRS Legislative Research analyses, and contemporary reports (2022–2026 data). The exact debt stock can vary slightly depending on the inclusion of certain contingent liabilities or updated GSDP estimates, but the overall upward trajectory and the heavy carry-forward nature of the debt remain consistent across sources.
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