Debt projected to hit Rs 4.5L crore by 2027

Chandigarh: The Punjab budget for 2026–27 navigates a complex fiscal terrain where absolute debt continues to climb, yet the state govt is pinning its hopes on an ambitious 10% gross state domestic product (GSDP) growth target to rebalance fiscal health.While total outstanding debt is projected to reach Rs 4,47,754 crore from Rs 4,07,784.13 crore (revised estimates for 2025–26), the state govt hopes to outpace this liability through economic expansion, which would lead to a slight reduction in the effective outstanding debt from 45.16% to 45.13% of GSDP. GSDP for FY 2025–26 is also estimated at Rs 8,91,487 crore. For FY 2026–27, GSDP is projected to reach Rs 9,80,635 crore, with an anticipated growth rate of 10%. According to experts, by prioritising this favourable growth-to-debt ratio over absolute figures, the govt is betting that a larger economic base will create the necessary fiscal space to sustain its welfare commitments while simultaneously narrowing the effective revenue deficit to 2.06%. While the power subsidy bill of the state is estimated to reduce from Rs 19,372 crore (RE 2025–26) to Rs 15,550 crore, Rs 7,715 crore is allocated for power subsidy on agriculture and Rs 2,064 crore for industrial power subsidy in 2026–27. As per the budget document, the fiscal deficit is projected to reduce from Rs 37,236.50 crore (4.18%) in the revised estimates for 2025–26 to Rs 39,970.65 crore (4.08%) in 2026–27. The effective outstanding debt is also estimated to witness a slight dip from Rs 4,02,633.51 crore (45.16%) in the revised estimates of 2025–26 to Rs 4,42,604.16 crore (45.13%) in the 2026–27 estimates. Finance minister Harpal Singh Cheema pointed out that AAP govt inherited a debt-to-GSDP ratio of 48.25% as on March 31, 2022, and it was down to 44.47% as on January 31, 2026. "Efforts at fiscal consolidation also started to reduce the humongous debt burden that previous govts left the state with," he said. As part of state govt's attempts at revenue augmentation and capital creation, total revenue receipts are projected to be Rs 1,26,190 crore in FY 2026–27 (up from Rs 1,16,515.66 crore in the last fiscal), of which the own tax revenue accounts for Rs 70,851 crore (up from Rs 61,700.29 crore in the last fiscal) and non-tax revenue is pegged at Rs 15,686 crore (down from Rs 19,517.22 crore in the last fiscal). Cheema also claimed revenue growth across each major revenue stream, with the excise revenue projected at Rs 53,122 crore, compared to Rs 27,934 crore during the 5-year period of the previous Congress govt and Rs 20,545 crore during the SAD–BJP regime. BOX: PUNJAB'S SHARE IN CENTRAL TAXES UP Cheema informed that the 16th Finance Commission enhanced Punjab's share in horizontal devolution from 1.807% to 1.996%. As a result, the state's share of central taxes is estimated to rise to Rs 30,464 crore in FY 2026–27, as against Rs 25,171 crore in FY 2025–26, with an increase of Rs 5,293 crore over the previous year. The Govt of India accepted the recommendations of the 16th Finance Commission for the 5-year award period. Further, grant-in-aid from the Centre is projected at Rs 9,188 crore in FY 2026–27.