With total outstanding debt and contingent liabilities of over Rs.2 lakh crore, cash-strapped Punjab government is hoping to turn the crunch around with the help of increased revenues following introduction of the Goods and Services Tax (GST).

"We are going to get Rs.5000 Crore because of the GST which will help Punjab,"the chief minister Capt Amarinder Singh said at a Press Conference while expressing support for the new tax regime.

State finance minister, Manpreet Singh Badal, said as Punjab's revenue will grow at a guaranteed rate of 14 per cent for next five years, state's revenues will double during the period.

"GST will bring an advantage to the state by bringing at par with other states in terms of tax imposition. Industries have not been coming to Punjab, partly because of the taxes, which are the highest in the state. Moreover, Punjab is a consumption-based state and GST will benefit us," Badal told The Statesman.

"The Union government has also assured to provide compensation in case of any revenue loss. The GST regime will be helpful in an increase in our revenue by 14 per cent in next five years. Therefore, I hope the GST will help improving the state's fiscal health," he added.

As of 31 March 2017, the total outstanding debt of the state was Rs.1,86,618 Crore including the informal debt of Rs.4,435 Crore which has been raised by the state government through various agencies without the approval of the Union government.

The total outstanding debt and contingent liabilities, thus, come to Rs.2,07,226 Crore which is 403.38 per cent of revenue receipts for 2016-17 at Rs.51,371.79 Crore.

The debt servicing (principal + interest) for 2017-18 is a whopping Rs.22,396 Crore against a net borrowing limit of Rs 12,819 Crore approved by the Union government for financial year 2017-18.

Thus the state can not invest the borrowed money into the development and build resource generating Capital assets.

"With GST, our (Punjab) tax revenues are likely to double in next five years. That's why I am looking at GST with great hope and Punjab as a state is fully prepared for it," Badal said. The state government hopes to gain from the introduction of GST through a broadened tax base and improved compliance.