Amid rising fiscal challenges, the Punjab government plans to raise a loan of ₹5,093 crore during the October-December period (third quarter) of the current financial year.
The funds will be raised from the open market through the sale of state securities. According to the state government’s borrowing calendar, ₹1,500 crore will be borrowed in two tranches in October, followed by ₹2,500 crore in November and ₹2,093 crore in December. The government securities, including fresh bonds with a tenure of 12 years or more and re-issuance of the existing state development loans, will be auctioned by the central bank through its core banking system, E-Kuber.
With these fresh loans, the state government’s borrowings between April and December are estimated to touch ₹23,000 crore. Against the net borrowing target of ₹34,201 crore projected in the 2025-26 budget estimates, the state government had raised ₹13,326 crore between April and August and an additional ₹4,000 crore was borrowed last month, people familiar with the state government’s market borrowings said.
While the rising borrowings have sparked concern over Punjab’s growing debt liability – estimated to reach a staggering ₹4.17 lakh crore by March 31, 2026, the state government’s financial challenges have deepened in the past few months. Several districts were first ravaged by the worst floods in nearly four decades and then followed by rate cuts in goods and services tax (GST). Official estimates have pegged the likely impact of GST rate rationalisation on collections at around ₹6,000 crore.
“The borrowing is within the prescribed limit and has the approval of the central government and the RBI,” a financial department official said. The Union finance ministry’s department of expenditure, in a communication to the state government regarding the annual borrowing ceiling guidelines for the current year, had stated that the net borrowing ceiling has been estimated based on the projected gross state domestic product (GSDP) as per the methodology prescribed by the 15th Finance Commission. “The state’s projected GSDP for the year 2025-26 is ₹8.30 lakh crore. Accordingly, the net borrowing ceiling at three per cent of projected GSDP for the year is ₹24,910 crore,” it said. The facility of additional borrowing of 0.50 per cent of GSDP over and above the three per cent ceiling for the 2025-26 has been extended to the state government, provided it meets certain performance criteria in the power sector. The net borrowing ceiling covers open market borrowings, negotiated loans from financial institutions, National Small Saving Fund (NSSF) loans, etc. The state is also permitted to borrow against repayments made during the year on account of market loans, negotiated loans, NSSF, additional central assistance for EAP, etc. With a debt- GSDP ratio of 46%, Punjab is already among the indebted states in the country.
{{/usCountry}}“The borrowing is within the prescribed limit and has the approval of the central government and the RBI,” a financial department official said. The Union finance ministry’s department of expenditure, in a communication to the state government regarding the annual borrowing ceiling guidelines for the current year, had stated that the net borrowing ceiling has been estimated based on the projected gross state domestic product (GSDP) as per the methodology prescribed by the 15th Finance Commission. “The state’s projected GSDP for the year 2025-26 is ₹8.30 lakh crore. Accordingly, the net borrowing ceiling at three per cent of projected GSDP for the year is ₹24,910 crore,” it said. The facility of additional borrowing of 0.50 per cent of GSDP over and above the three per cent ceiling for the 2025-26 has been extended to the state government, provided it meets certain performance criteria in the power sector. The net borrowing ceiling covers open market borrowings, negotiated loans from financial institutions, National Small Saving Fund (NSSF) loans, etc. The state is also permitted to borrow against repayments made during the year on account of market loans, negotiated loans, NSSF, additional central assistance for EAP, etc. With a debt- GSDP ratio of 46%, Punjab is already among the indebted states in the country.
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