Punjab’s debt position as the worst in the country: RBI

July 5, 2022

The RBI studied the debt-GSDP ratio of 10 states that prima facie appears to be in trouble.
Besides Punjab, it identified four other states—Bihar, Kerala, Rajasthan and West Bengal—that are also highly stressed.
Rajasthan, Kerala and West Bengal are projected to exceed the debt-GSDP ratio of 35 per cent by 2026-27, while Punjab is expected to cross 45 per cent.
Five other states in trouble are Haryana, Uttar Pradesh, Madhya Pradesh, Andhra Pradesh and Jharkhand.
These 10 states account for around half of the total expenditure by all state governments in India.
According to the RBI, the own tax revenue of Punjab, MP and Kerala has been declining over time.
Among the 10 states, Andhra Pradesh, Bihar, Rajasthan and Punjab exceeded both debt and fiscal deficit targets for 2020-21 set by the 15th Finance Commission.
Kerala, Jharkhand and West Bengal exceeded the debt target, while Madhya Pradesh overshot the fiscal deficit target. Haryana and Uttar Pradesh met both criteria.
Punjab would find it difficult to source loans after the RBI identified its debt position as the worst in the country.