Finance Minister Cheema says that the state has managed to pay back about 35% of the original amount of those older loans so far.
As per the recent official reports, the Punjab state’s debt has crossed over Rs 4 Lakh Crore, marking the amount to Rs 4.03 Lakh Crore. Such an amount has come ahead after fresh borrowings during the current financial year.
The state authorities has borrowed Rs 20,769.63 crore between April 2025 and January 2026 through loans. As per the official projections, if the debts continue in similar trend, it could touch nearly Rs 4.17 Lakh Crore by the close of the financial year.
From Crores to Lakh Crores: The rapid rise of Punjab’s Debt
Reaching to such an extreme amount of debt is not just an overnight game, it has been decaded that borrowings are increasing continuously. Considering the data back from 1952, Punjab owed only about Rs 78 crore. And, by 1964, that number rose to Rs 300 crore.
The situation became much more difficult during the years of political agression between parties in the state, which put a heavy strain on the budget and forced the government to borrow more. While the central government eventually waived some of those specific loans, the relief was not enough to stop the long-term slide into debt.
The increase in the numbers of borrowings have followed rapid trend in the past years. The breakdown is as follows-
| Year | Borrowings | Increased By |
| 2007-2008 | Rs 55, 982 Crore | – |
| 2017-2018 (Start of Congress Term) | Rs 1.82 Lakh Crore | Rs 1.26 Lakh Crore |
| When AAP took over (2022) | Rs 2.82 Lakh Crore | Rs 1 Lakh Crore |
| March 2025 | Rs 3.83 Lakh Crore (about 44% of Punjab’s total economy) | Rs 1.10 Lakh Crore |
AAP justifies why the Debt keeps growing?
Finance Minister Harpal Cheema explained that the current government is essentially “borrowing to pay back.” He noted that about 85% of the new loans taken under his administration have been used just to pay off the interest and principal of older debts inherited from previous governments. So far, the state has managed to pay back about 35% of the original amount of those older loans.
However, several other factors are making the situation tougher:
- Less Money from the Centre: The state says it is receiving less support from the central government. For example, during the previous Congress government, Punjab received over Rs 72,000 crore in GST compensation. Under the current government, that figure has dropped significantly to about Rs 27,832 crore.
- Unpaid Bills: The government recently had to clear Rs 8,000 crore in back-pay related to the Pay Commission, which was a huge, unexpected hit to the treasury.
- Revenue Stress: While the debt grows, the state is struggling to find enough new ways to bring in revenue to keep up with the interest payments.
With the debt levels continuing to rise, managing the state’s checkbook is going to be the biggest challenge for Punjab’s leaders in the coming months.
