Debt, deficit, subsidies pushing state finances into deeper stress: CAG

The State Finances Audit Report for 2023–24 noted that while Punjab recorded steady economic growth, its fiscal indicators reveal structural weaknesses that could make long-term debt stabilisation difficult.

The Comptroller and Auditor General of India (CAG) has flagged rising deficit, mounting debt and shrinking fiscal space, warning that high subsidies, committed expenditure and borrowings are pushing Punjab’s finances into deeper stress.

The State Finances Audit Report for 2023–24 noted that while Punjab recorded steady economic growth, its fiscal indicators reveal structural weaknesses that could make long-term debt stabilisation difficult.

The report stated that there is a persistent mismatch between receipts and expenditure.

The report was tabled in the Budget session of Vidhan Sabha on Monday.

Punjab’s Gross State Domestic Product (GSDP) at current prices grew at a compound annual growth rate of 8.52 per cent, rising from Rs 5.37 lakh crore in 2019–20 to Rs 7.44 lakh crore in 2023–24.

The budget outlay also expanded during this period, increasing from Rs 1.62 lakh crore to Rs 2.08 lakh crore, at a compound annual growth rate of 6.50 per cent.

But the growth alone has not translated into stronger fiscal stability, as pert the auditor.

Mismatch between spending and earning
While revenue receipts increased from Rs 61,575 crore in 2019–20 to Rs 89,192 crore in 2023–24, growing at a compound annual rate of 9.71 per cent, capital receipts also rose marginally from Rs 43,891 crore to Rs 46,902 crore during the same period, the expenditure was high.

Revenue expenditure including spending on salaries, pensions, subsidies climbed sharply from Rs 75,860 crore in 2019–20 to Rs 1.17 lakh crore in 2023–24, accounting for 80 to 96 per cent of total expenditure in recent years.

The state recorded a revenue deficit of Rs 28,215 crore in 2023–24, compared with Rs 14,285 crore in 2019–20.

In terms of the state economy, the deficit now stands at 3.79 per cent of GSDP.

The state is borrowing not just for development but also to finance its day-to-day spending.

Flagging another worrying trend, the report stated that the borrowed funds were not used for capital creation.

“Punjab spent only Rs 4,743 crore on capital expenditure in 2023–24, representing 3.88 per cent of total expenditure.

The capital expenditure accounted for just 4.40 per cent of total borrowings, indicating that the bulk of loans raised by the state are being used for consumption or repayment of past debt rather than for creating productive assets.” The gap between total expenditure and total non-debt receipts stood at Rs 33,115 crore in 2023–24, equivalent to 4.45 per cent of GSDP.

Taken together, committed and inflexible expenditure amounted to Rs 88,808 crore, accounting for 75.64 per cent of revenue expenditure and leaving limited fiscal space for new development initiatives.

Subsidies, especially power, weigh heavily
Rising debt and off-budget borrowings
Punjab’s debt burden has continued to rise steadily.

The debt-to-GSDP ratio increased from 42.71 per cent in 2019–20 to 43.72 per cent in 2023–24.

When off-budget borrowings are included, the overall liabilities rise to 44.27 per cent of GSDP.

The report has stated that state’s debt has grown at a compound annual rate of 9.16 per cent over the past five years.

The CAG has castigated the state for off-budget borrowings worth Rs 4,092.78 crore which were raised through public sector undertakings (PSUs) and other entities.

The report said although these borrowings do not appear in the state’s consolidated fund, they still have to be serviced through the budget.

Revenue deficit exceeds target level
The audit has also flagged potential risks to fiscal sustainability in the coming years.

Although the fiscal deficit of 4.45 per cent of GSDP remained within the 4.60 per cent ceiling prescribed under the Fiscal Responsibility and Budget Management (FRBM) framework, the revenue deficit exceeded the targeted level, reaching 3.79 per cent against the target of 3.52 per cent.

The state’s decision to revert to the Old Pension Scheme (OPS) could further increase financial pressures in the long run, the report notes.

The report has stated that Utilisation certificates for Rs 3,089.57 crore in grants remained pending as of March 2024, raising doubts about whether funds were used for their intended purposes.

Similarly, 2,037 Abstract Contingency bills worth Rs 2,804.85 crore had not been adjusted through detailed bills.

In another instance, Rs 406.98 crore collected as cess and levies had not been deposited into government accounts.

The audit also found that supplementary provisions worth Rs 1,147.64 crore were unnecessary in several cases because actual expenditure did not even reach the level of original budget allocations.

Kanchan Vasdev is a Senior Assistant Editor in The Indian Express’ Punjab bureau.

She is a highly experienced journalist with 22 years of expertise covering high-stakes politics, governance, and social issues in Northern India.

Professional Background
Role: Primary reporter covering the Punjab Chief Minister’s Office (CMO), government policies, and the Aam Aadmi Party (AAP) leadership in the state.

Experience: She previously worked with The Tribune and has played a key role in launching various city editions.

Special Projects:
Abandoned Brides: Authored a monograph on brides abandoned by NRIs as part of the Prabha Dutt Memorial Fellowship.

Environment: Worked as a Centre for Science and Environment (CSE) fellow, focusing on the pollution levels in the Satluj river.

Recent Notable Articles (Late 2025)
Her recent reporting focuses on the legislative strategies and political maneuvers of the Bhagwant Mann-led Punjab government:
1.

Legislative & Governance Standoffs
"Punjab govt advances special Assembly session to pass resolution against VB-G RAM G Bill" (Dec 20, 2025): Reporting on the state's move to block the Centre's "Viksit Bharat" mission, which the state claims will undermine MGNREGA.

"Punjab govt doubles down on special sessions, sixth in January" (Dec 19, 2025): Detailing the AAP government's use of special sessions as a legislative tool amid tensions with the Governor.

"Punjab asks 'VIP teachers' working near Chandigarh to go back to border districts" (Dec 16, 2025): Reporting on CM Mann's move to end the practice of influential teachers avoiding postings in remote areas.

2.

Political Analysis & Rural Polls
"Punjab rural polls: Why Akalis are likened to dinosaurs in Punjab" (Dec 19, 2025): Analyzing CM Bhagwant Mann's rhetoric against the Shiromani Akali Dal (SAD) following local body elections.

"AAP claims win in 78% Punjab zila parishads as counting continues" (Dec 18, 2025): Breaking down the results of the 2025 rural elections.

"Rahul Gandhi and Sidhu alike, says Bhagwant Mann" (Dec 13, 2025): Covering the CM's critique of the Congress leadership.

3.

Law Enforcement & Bureaucracy
"Suspended Punjab IPS officer Ravjot Kaur Grewal awaits reinstatement" (Dec 10, 2025): Investigative reporting on the bureaucratic red tape involving the Election Commission and the state government.

"Punjab declines to give parole to Amritpal Singh" (Nov 27, 2025): Detailing the state government's refusal to grant parole to the radical preacher and sitting MP.

4.

Welfare & Economy
"Punjab government's plan to add more freebies to 'atta-dal' scheme hits funds roadblock" (Dec 4, 2024): An analysis of the fiscal challenges facing the state's flagship food security program.

"Mann leads Punjab delegation to Japan and South Korea for investor outreach" (Dec 2, 2025).

Signature Beat
Kanchan Vasdev is known for her insider access to Punjab's political executive.

Her writing provides deep insights into how state policies are formulated and the friction points between the state government and central authorities.

Her dual expertise in environment and law allows her to report on complex issues like the "Farmhouse Policy" (Dec 18, 2025) and river pollution with a unique policy-oriented lens.

X (Twitter): @kanchan99 ...

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