Public Indebtedness in Punjab State of India: A Critical Review

A neoteric phenomena which has put the Indian economy under unbearable pressure is ballooning borrowings because of unceasing expenditure by the governments. In India, rising debt to GDP ratio has accentuated the problem of outpacing revenue expenditure which led to the implementation of FRBM Act, 2003 and after that indebtedness among states has declined. So, this paper focuses on the analysis of public indebtedness of non special category states of India and to access the level of indebtedness, debt to GDP ratio is taken. The state that has emerged as one of the weakest in tackling with the situation of growing indebtedness is Punjab over the period of 2000–2017 along with West Bengal because of rise in revenue expenditure especially the non-development component, stagnant growth in state's own tax revenue and sliding non-tax revenues. States like Odisha, Chhattisgarh, Andhra Pradesh, Madhya Pradesh and Bihar have low Debt to GSDP ratio and are spending more on developmental activities whereas the Punjab state is spending very less amount on developmental activities and more interest payments which can lead to the further deteriorate the financial health of the state.