Panjab’s Debt to Exceed 50% GDP; Court Demands Spending Transparency

A National Council of Applied Economic Research (NCAER) study has found that multiple Indian states will see further rises in debt-to-GDP ratios by 2027-28, with Panjab expected to surpass 50%. Titled The State of the States: Federal Finance in India the report notes that half of the 20 large states experienced debt ratio increases exceeding 10% between 2012–13 and 2022-23, with Panjab’s debt climbing most sharply at 15.8%. By continuing this trend, the state may add another 6.9% to reach 53.7%. The study urges a ‘fiscal grand bargain,’ offering heavily indebted states some debt relief in exchange for ceding more control to the Union government, as many states weigh expansionary welfare spending. Meanwhile, the Punjab and Haryana High Court (PHHC) rejected the Panjab govt.’s request to recall an order requiring disclosure of advertising expenditures and new police vehicle purchases from 1 Apr 2024 to 20 Jan 2025. Officials from Panjab’s forensic laboratory had earlier testified to a shortage of funds for critical testing equipment, prompting the court to question whether govt. money was being diverted to promotion rather than essential criminal justice needs. Though the govt. later alleged that funds were unused, the court found no basis to withdraw its directive and granted four more weeks for compliance. A separate PHHC bench also demanded personal affidavits on advertising outlays in litigation concerning arrears owed under the Sixth Pay Commission. The state argued that up to USD 2.1B in arrears for employees and pensioners would be staggered until 2030-31. The court’s firm stance reveals transparency concerns over large-scale spending priorities. Even as Panjab aims to address its growing debt crisis, it faces judicial scrutiny over how resources are allocated, and questions on meeting fiscal obligations and responding to public welfare needs.