Punjab Finance Minister Harpal Singh Cheema on Saturday urged the Union government to extend immediate fiscal assistance and announce a special economic package for Punjab, citing an extraordinarily difficult year – first due to heightened India – Pakistan border tensions and subsequently due to the worst floods witnessed in decades in 2025, the state has endured.
During a pre-Budget meeting with Union Finance Minister Nirmala Sitharaman in New Delhi, the finance minister submitted a detailed memorandum outlining the state’s key financial requirements and policy demands for the Union Budget 2026-27.
Emphasising Punjab’s strategic importance, Harpal Singh Cheema said the state, being the country’s first line of defence, suffered severe economic disruption due to prolonged security tensions along the international border, followed immediately by a devastating monsoon disaster that was officially declared a calamity of severe nature by the Ministry of Home Affairs (MHA).
On the scale of devastation, the minister stated that floods impacted more than 2,300 villages and affected nearly 20,000 families across the state. He informed Union Finance Minister Nirmala Sitharaman that comprehensive ground-level assessments have pegged the total damage at ₹12,905 crore. “To manage rehabilitation and reconstruction arising from such extraordinary circumstances, Punjab requires fiscal flexibility,” he said, formally requesting permission for a one-time additional borrowing limit of 1% of GSDP for 2025–26 under the provisions of the Fiscal Responsibility and Budget Management (FRBM) Act applicable during natural disasters and national security emergencies.
Raising concerns over national security, Minister Cheema underlined that recent developments along the international border have made it imperative to substantially upgrade Punjab’s security infrastructure.
He sought special Central assistance of ₹1,000 crore for police modernisation, strengthening emergency response systems, and deploying advanced anti-drone technology to effectively counter cross-border threats and narcotics trafficking. “As a border state bearing a disproportionate security burden, this support should be seen as cooperative federalism in action, not as a concession,” he said.
Turning to agriculture and rural infrastructure, the Finance Minister flagged the issue of the withheld Rural Development Fund (RDF), urging the Centre to immediately release the pending amount of ₹7,757 crore calculated up to June 2025. “These funds are critical for maintaining rural roads and infrastructure,” he added.
Stressing the urgent need to shift away from water-intensive crops, Cheema proposed a special budgetary allocation for paddy diversification, arguing that the existing incentive is inadequate. He requested that the incentive be increased to ₹15,000 per acre to drive real behavioural change among farmers and safeguard rapidly depleting groundwater resources.
On GST reforms, the Punjab Finance Minister pointed out that the state has suffered a severe and continuing revenue shock following the implementation of GST 2.0. “Punjab is facing an annual revenue loss of nearly ₹6,000 crore, which amounts to around 44% of its own tax revenue,” he noted.
He strongly pressed for a predictable GST stabilisation or compensation mechanism for states facing such structural revenue erosion, stating that the fiscal sustainability of states cannot be compromised.
The Finance Minister also expressed strong opposition to the proposed changes to the MGNREGA framework, arguing that the new model dilutes the employment guarantee and shifts a significant financial burden onto the states. He called for the restoration of the original demand-driven structure and funding pattern of the scheme.
Raising concerns over public health financing, Cheema drew attention to the sharp reduction in the cash allocation under the National Health Mission (NHM) for 2025–26, which he said had been cut from the initially communicated ₹452.78 crore to ₹252 crore. He requested restoration of the original allocation to ensure uninterrupted delivery of essential health services across Punjab.
Concluding his submission, Punjab Finance Minister Harpal Singh Cheema said he hoped the Union Budget would reflect the true spirit of cooperative federalism by responding to Punjab’s unique challenges as a border state simultaneously recovering from security pressures and climate-induced disasters.