Saptrishi Soni: Punjab, historically the breadbasket of India, finds itself at a critical juncture, grappling with a complex web of economic challenges even as its government unveils ambitious development blueprints. A comprehensive analysis by Professor Ranjit Singh Ghuman of Guru Nanak Dev University, Amritsar, paints a stark picture of the state’s financial health, revealing a significant decline from its Green Revolution-era prominence. Between 2014–15 and 2022–23, Punjab registered an average annual growth rate of merely 4.62%, lagging behind the national average of 5.67%. This slowdown has seen its per capita income ranking plummet to 10th among 18 major states by 2022–23, a considerable fall from its once top-ranking position. The state’s outstanding debt has surged to an alarming Rs 4.17 lakh crore, projected to constitute 46.8% of its Gross State Domestic Product (GSDP) for 2025–26. A substantial portion of the state’s revenue, over 41%, is consumed by debt servicing, while another 57.5% goes towards salaries, pensions, and subsidies, leaving a negligible margin for crucial developmental spending. This fiscal reality suggests a vicious cycle of financial entrapment, where high committed expenditures stifle productive investments, leading to industrial stagnation and rising unemployment. The industrial sector, in particular, has seen a significant decline, with over 18,700 units closing down between 2007 and 2014, a trend attributed to outdated technology, insufficient financial support, and a policy environment that historically favored neighboring hill states like Himachal Pradesh and Uttarakhand. This situation highlights a critical challenge for the state: how to break free from its fiscal constraints to foster long-term growth and economic diversification.
Adding to the complexity, the Aam Aadmi Party (AAP)-led Punjab Government’s ambitious land acquisition initiative for urban development has ignited considerable political outrage. The plan seeks to acquire 24,311 acres across more than 30 villages in Ludhiana for the establishment of urban estates, promoting a voluntary land pooling policy. Under this scheme, landowners are offered a residential plot of 1,000 square yards and a commercial space of 200 square yards for every acre contributed, with the promise of substantial property value appreciation—for instance, land valued at Rs 1 crore per acre potentially yielding developed property worth Rs 3 to 4 crore. Chief Minister Bhagwant Mann has emphasized the voluntary nature of the policy, assuring transparency and direct agreements with landowners, while also criticizing past governments for alleged corrupt land acquisition practices and highlighting the government’s determination to regulate and redevelop illegal colonies. However, this policy has met with fierce opposition from the Bharatiya Janata Party (BJP) and the Shiromani Akali Dal (SAD). BJP state general secretary Rakesh Rathore has vehemently stated that his party would not permit the acquisition of “even an inch” of farmers’ land, arguing that the policy would strip farmers of their economic freedom by preventing them from selling their land or securing loans against it. The opposition questions the necessity of acquiring new land when numerous residential colonies already lie vacant and undeveloped. This ongoing contention underscores a fundamental conflict between the state’s vision for planned urban expansion and the deep-seated attachment of farmers to their land, suggesting that even policies with stated benefits can face significant resistance if they are perceived to erode existing rights or trust.
Despite these fiscal and political headwinds, the Punjab government has unveiled a record-breaking Annual Development Programme (ADP) for the fiscal year 2025–26, allocating an unprecedented Rs 1.24 trillion. This ambitious program is designed to accelerate economic growth, enhance infrastructure, and expand access to critical public services across the province. Significant allocations include Rs 493.5 billion for social sectors, Rs 335.5 billion for infrastructure, and Rs 164.2 billion for production sectors. New flagship initiatives such as the ‘Apni Chhat Apna Ghar’ housing project, with an allocation of Rs 50 billion, and the ‘Chief Minister’s Saaf Pani Programme,’ with a total outlay of Rs 15 billion, are also part of this extensive plan. In the transport sector, Rs 85 billion has been earmarked for introducing over 600 eco-friendly electric buses in various cities, alongside seed money for feasibility studies on high-speed rail, tourist trains, and urban mass transit systems in major urban centers like Lahore, Faisalabad, and Gujranwala. The sheer scale of this ADP, however, raises pertinent questions when juxtaposed with the state’s precarious fiscal health. With nearly all revenue consumed by committed expenditures, the funding mechanism for such a massive program remains a critical concern. While foreign assistance accounts for Rs 124.3 billion , the program’s magnitude suggests a heavy reliance on future revenue generation or further debt accumulation, creating a tension between the government’s developmental aspirations and the underlying economic realities.
The agricultural sector, the traditional bedrock of Punjab’s economy, is also undergoing a profound transformation, albeit one fraught with challenges. Wheat and paddy cultivation continue to dominate, accounting for over 80% of the state’s sown area and contributing significantly to national food security by producing over 18% of India’s wheat and 12% of its rice. The state benefits from fertile soil, a well-developed canal irrigation system, subsidized tube wells, and widespread mechanization. Yet, this success has created a paradox: high productivity is sustained by practices that are environmentally unsustainable and increasingly economically challenging for farmers. Severe groundwater depletion, rising input costs, unpredictable climate patterns leading to erratic rainfall and heatwaves, and the pervasive issue of monoculture contributing to soil degradation are pressing concerns. The annual problem of stubble burning further exacerbates environmental impact and soil health. In response, the state is actively promoting innovations and sustainable practices, including precision farming utilizing satellites, AI, and IoT sensors for real-time crop health monitoring; efficient irrigation methods like drip, sprinkler, and solar pumps; and crop diversification to include legumes, maize, and horticulture. The push for organic farming, agroforestry, and digital platforms for market access and advisories represents a critical pivot. Nevertheless, the widespread adoption of these practices faces hurdles related to capital expenditure, farmer education, and the establishment of assured market linkages for diversified crops. The fact that over 75% of Punjabi farmers no longer wish for their children to remain in agriculture underscores the urgency of this transformation, highlighting a looming intergenerational crisis in the state’s foundational sector.
The broader context of governance and policy direction in Punjab is characterized by a continuous negotiation between populist demands and pragmatic economic reforms. Chief Minister Mann’s emphasis on transparency and consent in land acquisition, coupled with his criticism of past corrupt practices , reflects an attempt to build public trust. However, the study by Professor Ghuman explicitly flags political populism as a significant barrier to economic revival, advocating for the rationalization of subsidies and freebies. The strong accusations from opposition parties like the BJP and SAD, who accuse the AAP government of attacking farmers’ interests and lacking transparency in the land pooling policy , highlight a deep-seated trust deficit and a highly polarized political discourse. This dynamic suggests that the state’s ability to implement long-term, sustainable economic reforms is severely hampered by the need to balance political popularity with fiscal responsibility. Even well-intentioned policies may face significant headwinds if they are perceived to erode existing entitlements or land rights, making governance a continuous challenge where short-term political gains often compete with the imperative for long-term economic health.
