Straight Talk | Punjab’s Economy At A Crossroads: Protests Cleared, Real Issues Remain
Punjab’s economic woes demand immediate action, not just political manoeuvring. The state must pivot towards a long-term, sustainable recovery plan
Punjab has suffered at the hands of economic disruptors for five years now. What started in 2020 as a state-wide protest against the three farm bills brought by the Narendra Modi government metamorphosed into a larger movement, with farmers primarily from Punjab, Haryana, and Uttar Pradesh camping on the borders of Delhi for more than a year. The Centre then decided to withdraw the contentious agriculture bills, which helped disperse the protesters. While normalcy returned to Haryana and Uttar Pradesh, Punjab somehow found itself caught between a rock and a hard place. Farmer unions, ostensibly worried about losing relevance, continued demonstrations against the Modi government at the state level. For about a year now, some farmer unions have blocked the border between Punjab and Haryana, causing tremendous pain to the state’s economy.
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After its Delhi loss, AAP is in survival mode. A Punjab defeat in 2027 could relegate it to political obscurity. So when Punjab police came cracking down on protesters at the Shambhu and Khanauri borders on March 19, many were quick to connect the dots. Ahead of a crucial assembly bypoll in Ludhiana West, AAP sought to address the fears of Punjab’s industrialists and traders, who have suffered extensive losses owing to continuing protests.
The prolonged shutdown of key border crossings—Shambhu, Khanauri, and Kundli—has led to an estimated economic setback exceeding Rs 1.25 lakh crore for Punjab and Haryana. The regions adjacent to these borders faced immediate financial damages surpassing Rs 1,600 crore, while Punjab’s businesses alone bore losses north of Rs 1 lakh crore. Therefore, the Aam Aadmi Party stood a fair chance of losing the battle for Ludhiana West even before the first vote was cast. It is for this reason that the Punjab police was brought in to dismantle the protest sites and detain farmer leaders and hundreds of protesters. From vociferously supporting such protesters when they were camping on the borders of Delhi to now, quite literally bulldozing their protest sites—life has come full circle for Arvind Kejriwal’s party.
Time to focus on Punjab’s real issues
Another reason why Bhagwant Mann’s government felt comfortable bulldozing the kisan dharna is the fact that farmer unions have gradually lost support in Punjab. The initial adrenaline rush of 2020-21 is over, and Punjabis want their state to get back on track and focus on issues that really matter. After all, the issues facing Punjab are severe and many.
Let’s start with the economy. Punjab ranks as India’s second-most indebted state, with its total liabilities estimated at Rs 3,78,453 crore. With a debt-to-GSDP ratio of 46.6%, Punjab holds the second-highest debt burden in the country, effectively owing nearly half of its annual economic output. The state is now relying on borrowing merely to cover routine expenses, trapping it in a risky cycle of debt repayment and fresh loans. Unwise subsidies for farmers, especially the provision of free electricity, have landed Punjab in its present financial mess. In addition, industrial growth has been stagnant, with many manufacturers even moving out of the state for greener pastures.
Punjab also faces a crippling water table crisis. The land of the five rivers—once known for its water abundance—is now on the path to desertification. In many ways, this is a tragedy of epic proportions. As per data presented by the union minister of state for Jal Shakti, Raj Bhushan Choudhary, in the Rajya Sabha on February 3, groundwater levels in Punjab have been steadily declining. Out of 174 wells monitored over the past five years, 67.2% (117 wells) recorded a drop in water levels. Punjab ranks among the worst-affected states in the country, experiencing one of the most significant groundwater depletions.
Punjab’s drug problem needs no introduction. Bollywood has made films about it; Punjabis have been made fun of, and India’s enemies have taken advantage of the menace. The Aam Aadmi Party, which vowed to eliminate drugs from Punjab, has evidently failed to keep its promise. Only recently has the party shifted gears and launched an extensive crackdown on the state’s drug cartels. This, too, has more to do with the setback AAP faced in Delhi than a genuine desire to alleviate the state’s drug woes.
Add to the mix the fact that Punjabis are leaving their state to settle abroad, and you now also have a demographic problem to deal with. As more and more Sikhs fly out, Christian missionaries have been having the time of their lives in Punjab. The lure of money and supposed miraculous healings is driving many low-income residents of the state towards Christianity. According to reports, more than 350,000 people have converted to Christianity in the past two years alone. If you happen to travel through Punjab now, the demographic change is hard to miss.
What needs to happen
Punjab’s economic woes demand immediate action, not just political manoeuvring. The state must pivot towards a long-term, sustainable recovery plan through:
• Industrial Revitalisation: Punjab must create an investor-friendly climate by cutting bureaucratic red tape, upgrading infrastructure, and offering tax incentives to manufacturers and logistics firms. Reviving Ludhiana, Amritsar, and Jalandhar as industrial hubs will be key to attracting businesses back.
• Agricultural Reform: Punjab’s overreliance on wheat and paddy is unsustainable. Farmers need incentives to shift towards less water-intensive, high-value crops like maize, pulses, and horticulture. The government must also invest in precision farming, irrigation efficiency, and post-harvest infrastructure.
• Debt Restructuring & Fiscal Discipline: Punjab cannot afford reckless borrowing. The state must streamline subsidies, improve tax collection, and focus on revenue-generating sectors like food processing, renewable energy, and tourism.
• Water Conservation: With Punjab’s groundwater levels depleting at alarming rates, urgent conservation measures are essential. Large-scale adoption of microirrigation, rainwater harvesting, and crop pattern shifts must be fast-tracked.
• Tackling Social Decline: Punjab’s rising drug abuse problem demands a multi-pronged crackdown—stronger law enforcement, stricter border control, and expanded rehabilitation programmes. Additionally, unchecked demographic shifts require the government to invest in skill development and local job creation to stem mass emigration.
The bulldozers may have cleared Punjab’s roads, but the real cleanup is yet to begin. While the immediate economic relief is welcome, it is only a temporary fix. The AAP government now faces a defining test: will it seize this opportunity to address Punjab’s deep-rooted crises, or will it continue firefighting one crisis at a time? Bulldozing protests might win elections, but it won’t secure Punjab’s future. Only a bold, reform-oriented agenda can do that.
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