Punjab Records Highest Debt-to-GSDP Ratio among all states: CAG Report

Kanwar Inder Singh/ royalpatiala.in News/ September 20,2025

The Comptroller and Auditor General of India (CAG), K. Sanjay Murthy, has released a first-of-its-kind decadal report (2013–14 to 2022–23) on the fiscal health of Indian states, highlighting a sharp increase in public debt and its implications for fiscal sustainability.

According to the report, Punjab recorded the highest debt-to-GSDP ratio in the country at the end of the 2022–23 financial year.

State	Debt (as % of GSDP)	Public Debt (as of March,2023)	GSDP (2022-23)
Punjab	40.35%	Rs. 2,76,459 cr	Rs. 6,85,146 cr

The report stated that Punjab’s total public debt—comprising internal debt, and loans and advances from the Central Government—stood at ₹2,76,459 crore at the end of FY 2022–23. This accounted for 40.35% of its Gross State Domestic Product (GSDP), the highest ratio among all states. GSDP is the value of all finished goods and services produced within a state’s geographical boundaries.

“In Punjab, The capital expenditure in education, art and culture, and sports fell consistently from ₹227 crore in 2019–20 to ₹183 crore in 2022–23,” the report said

Furthermore, the report highlighted that Punjab’s capital expenditure was as low as 26% of its net borrowings.

What is Debt-to-GSDP ratio?

A Debt-to-Gross State Domestic Product (GSDP) ratio is a critical metric assessing a state’s ability to service its debt – indicating its ability to repay debt.

A higher ratio signals greater financial risk.

2. A lower ratio suggests greater stability and capacity to handle debt.

What is the acceptable level of debt-to-GSDP ratio?

The NK Singh Committee (a government-appointed committee established in 2016 to review the FRBM Act and provide a future fiscal roadmap for India) recommended a debt-to-GSDP ratio of 20% for states.