Punjab Debt Crisis: Time for a Fiscal Overhaul
Punjab is facing an extreme debt crisis, with its public debt rising by ₹47,000 crores in the past five years. This has raised concerns among experts, who are calling for a check on freebies and other populist measures.
According to a report by the Comptroller and Auditor General of India, Punjab’s public debt stood at ₹2.90 lakh crores as on March 31, 2023.
This is up from ₹2.43 lakh crores as on March 31, 2018. The report also states that Punjab’s debt-to-GDP ratio has increased from 56.2% in 2017-18 to 60.6% in 2022-23.
This is significantly higher than the national average of 42.3%. Last year the Reserve Bank of India had revealed in a report that half of Punjab’s GDP consists of debt taken up by the state of Punjab.
Experts say that Punjab’s debt crisis is due to a number of factors, including poor financial management, high subsidies, and low revenue generation.
“The state government has been relying heavily on loans to finance its expenditure,” said economist Dr. Inderjit Singh. “This is unsustainable in the long run.”
Dr. Singh also pointed out that Punjab’s subsidies on electricity and other essential commodities are among the highest in the country. These subsidies put a heavy strain on the state’s finances.
“The government should also focus on increasing its revenue generation,” Dr. Singh said. “This can be done by improving tax collection and attracting investments.”
The Punjab government has announced a number of measures to address the debt crisis. These include reducing subsidies, increasing revenue generation, and selling off non-core assets.
However, experts say that these measures may not be enough to solve the problem. They are calling for a more comprehensive approach, which includes a check on freebies and other populist measures.
“The government should be more careful about announcing freebies,” said Dr. Singh. “Freebies may be popular with the public, but they are not sustainable in the long run.”
Dr. Singh also called for a greater focus on economic development. “The government should create a more conducive environment for businesses to invest in the state,” he said.
“This will help to increase revenue generation and create jobs.”
The Punjab debt crisis is a serious problem that needs to be addressed urgently.
The state government should take all necessary steps to reduce its debt and improve its financial health.
