Challenges before AAP’s government in Punjab: How to create jobs while reducing debt burden

Generating employment while reducing the debt burden will be one of the challenges for the AAP government in Punjab.

A change of guard in Punjab, five years ago, came with an assurance to bring down the state’s debt burden. However, contrary to what was promised, the debt burden ballooned by nearly Rs 70,000 crore between 2017 and 2021.

As per the latest data, Punjab’s total liability is more than 50 per cent of the state’s GDP. The proportion stands at 31 per cent for all states taken together.

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A higher debt burden per se does not hurt if revenue collection remains buoyant. However, while outstanding liabilities grew 37 per cent from Rs. 1.8 lakh crores to Rs. 2.5 lakh crores, revenue grew 31 per cent from Rs. 33,610 crores to Rs. 43,870 crores between 2017 and 2021.

The economic growth of Punjab trailed the national average between the financial years 2015 and 2019. However, Punjab's GDP caught up and walked hand-in-hand with India’s GDP growth in the last two years. Punjab and India both clocked a GDP growth of four per cent and -6.6 per cent in the fiscal years 2020 and 2021.

Despite the overall growth, the situation at the employment front is still grim. The average unemployment rate between 2017 and 2021 stood at 8.5 per cent for Punjab and 7.2 per cent for India, according to the Centre for Monitoring Indian Economy.

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