Debt, Deficit, and Decline: Punjab's economic woes continue

NITI Aayog's recent report, Macro and Fiscal Landscape of the State of Punjab, reveals a troubling economic picture. Between 2012-13 and 2021-22, Punjab's real Gross State Domestic Product (GSDP) grew at an average annual rate of just 5%, lagging behind the national average of 5.6%. More concerning, Punjab's contribution to India's nominal GDP has declined from 3.7% in 1990-91 to 2.6% in 2021-22. The report further highlights the state's worsening debt situation, with a debt-to-GSDP ratio of 47% in 2022-23—well above the median state's ratio of 32.1%. Revenue collection remains weak, with revenue receipts comprising only 13.9% of state finances.

- Dr. Rajiv Khosla

Meanwhile, the expenditure-to-GSDP ratio stands at 18.9%. These figures underline the urgent need for Punjab to overhaul its economic strategy, improve revenue generation, and manage its growing debt to achieve sustainable growth and development.

In this challenging context, Finance Minister Harpal Singh Cheema unveiled a ₹ 2.36 lakh crore budget for FY 2025-26, themed “Changing Punjab.” The budget promises initiatives such as a 'Drug Census,' an expanded 'Sehat Card' program, and increased allocations for health, education, and infrastructure. However, opposition parties swiftly dismissed the budget as a “bunch of lies,” criticizing it for neglecting key constituencies such as farmers, laborers, employees, and industrialists. They also pointed to delayed action on the state's drug crisis and the absence of the promised ₹1,000 monthly allowance for women. As a result, the budget has sparked intense debate, leaving the public uncertain about whether these initiatives will deliver meaningful change. A closer examination of the budget's provisions and fiscal strategy is critical to assess its true impact.