TheReserve Bank of Indias fiscal risk analysis report predicts thatPunjabs debt-to-GSDP (gross state domestic product) ratio will keep deteriorating and exceed 45% in financial year 2026-27, while the states outstanding debt will cross Rs 3.05 lakh crore by the end of the current FY. It joins Bihar,Kerala,Rajasthan, and West Bengal in the club of highly stressed states with unsustainable .
The RBI found Punjab and Haryana among the 10 states with the highest debt burden, the other being Rajasthan, Kerala, West Bengal, Bihar, Andhra Pradesh, Jharkhand,Madhya Pradesh, and Uttar Pradesh. Contingent liabilities have surpassed 5% of the GSDP in Punjab, Rajasthan, Uttar Pradesh and Andhra Pradesh. These 10 worst states account for around half the expenditure by all state governments. Their other vulnerability indicators are GFD-to-GSDP (gross Fiscal Deficit to gross state domestic product) ratios equal to or more than 3% in fiscal 2021-22, besides deficits in their revenue accounts (except Uttar Pradesh and Jharkhand).
The interest payment to Revenue Receipts ratio, a measure of debt servicing burden on the states revenues, was more than 10% in eight of these states, barring Bihar and Jharkhand. The own tax revenue of Punjab, Madhya Pradesh, and Kerala has been declining, while their non-tax revenue has remained volatile, dropping significantly in recent years.