Congress MP Manish Tewari has raised serious concerns about Punjab's deteriorating financial health, highlighting a massive surge in the state's debt over the past three decades. Tewari stated that Punjab's debt, which stood at ₹15,250 crore in 1996, is estimated to reach an alarming ₹4.47 lakh crore by the end of the 2026-27 financial year.
Populist Spending Blamed for Fiscal Crisis
The Chandigarh MP attributed this exponential increase to "populist and profligate spending" by successive state governments. He explicitly warned that Punjab "just can't afford freebies anymore," arguing that the debt is not militancy-related but a direct consequence of fiscal mismanagement over the last 30 years.
Tewari noted that the debt had already doubled to ₹32,496 crore by 2002, setting a clear trajectory for the current crisis. Since the early 1990s, Punjab's governance has largely alternated between the Shiromani Akali Dal-BJP alliance and the Congress, with the Aam Aadmi Party coming to power in 2022.
Borrowing to Service Existing Debt
A critical aspect of Punjab's financial woes, according to Tewari, is that the state has reached a point where it is borrowing merely to service its existing debt, rather than funding development initiatives. He revealed that approximately 23% of the state's revenue receipts, amounting to ₹28,755 crore, will be consumed by interest payments alone. The total debt servicing cost, including principal repayment and interest, is projected to be around ₹43,194 crore in 2025-26.
"In effect, the state is borrowing to pay interest on existing debt rather than spend on development," Tewari emphasized, questioning the sustainability of this model.
Second-Highest Debt Burden in India
Adding to the grim picture, Tewari pointed out that Punjab's debt-to-GSDP (Gross State Domestic Product) ratio stood at 46.6% as of March 31, 2025. This makes Punjab's debt burden the second-highest in the country, surpassed only by Arunachal Pradesh at 57%.
The Congress leader highlighted the severe pressure on state finances, noting that after meeting revenue expenditure and debt obligations, only about 5.6% of the state's resources are left for capital expenditure—the spending that creates long-term assets and drives development. Tewari urged Punjab's politicians to seriously reconsider the state's fiscal priorities and put an end to unsustainable handouts.