Can Punjab save itself? Short answer is No

In a blog I wrote last month (The Punjab Crisis – 2026 Edition), I argued that the current crisis is a continuation of problems that arose over five decades ago. I also argued that the underlying causes were deeper than the behavior of Sikh religious leaders or the state’s politicians. Of course one can apportion blame very widely, but the Punjab’s problems are deeper, and they are structural. There are embedded socioeconomic factors that matter, but the main cause of Punjab’s problems is a dysfunctional national food security policy.A senior newspaper editor, on reading my blog, asked me, “can Punjab save itself?” The short answer, most emphatically, is “No.” If that sounds hopeless, there is another question that can be asked, “Can Punjab be saved?” And the answer, as I will argue in this blog, is “Yes.” Before I get into outlining an answer, which will have to skimp on details, I should say that I am not going to offer anything particularly new or insights that are unique to me. Economists, practitioners and policymakers have been articulating these ideas in many contexts for many years. But changing the national food security policy has not been emphasized enough. And the need to deal with “switching costs” has also not been adequately recognized. These switching costs are real economic costs, not just political costs of redistribution that have to be managed when an economic system is overhauled.I will return to these matters of making systemic change feasible, but what needs to be done? Diversifying Punjab’s agriculture is a no-brainer, and has been on the table since at least the 1980s. Some diversification has occurred, but it is minimal. Diversification requires better public policies for managing risks, and creating new farm-to-fork value chains. Since Punjab is tiny in the context of national and global food markets, diversification requires a scaled-up effort. Relying on multinational or large domestic corporations is one route, but there is enough entrepreneurial talent and experience in Punjab to create scale through public policies that incentivize small to medium firms. Two aspects of this shift require going beyond Punjab.First, the current nationally driven wheat-rice procurement system has to be gradually dialed down, but with alternatives created. This will not cover most of the output of potential diversification, but there are other crops, like pulses, that are suitable for the food security portfolio, and more compatible with diversification. Second, Punjab is part of an agricultural region that includes Haryana and Himachal Pradesh. Crop diversification will be easier and more quickly scalable if it is a regionally coordinated effort. This seems one of those cases – unlike river waters – where states do not have to play a zero-sum game. The state government’s role is non-trivial. In particular, making sure that there is institutional capacity and policy space for collective efforts by farmers and entrepreneurs is something the state can and must do. In passing, the incentives of state politicians have been completely distorted by the wheat-rice procurement system, so it will require some effort to restore more competent governance. But that is feasible, as I will argue later.Agriculture will not save Punjab by itself. There is not enough land or water. Switzerland and The Netherlands have high-value-added agricultural sectors in small areas, but the bulk of their wealth comes from elsewhere. Of course. We teach in basic economics classes that living standards go up when labor is more productive, and labor productivity rises with increases in human capital and physical capital, and from innovation. From this perspective, manufacturing vs services debates are secondary. Some economists have argued that India (not just Punjab) has missed the manufacturing boat, and is doomed to deindustrialization. My own perspective is that any number of new goods and services are constantly emerging as the world’s needs evolve – climate change and aging populations are two obvious drivers. A less obvious one is the proliferation of digital goods and services (even before AI accelerated that process).Diversification beyond agriculture is absolutely necessary if Punjab is to be saved. How can it be achieved? The Punjab government’s own Vision 2047 document had a long list of areas where economic growth might be pursued. In my opinion, it was too broad a list, and the document lacked a clear sense of strategic priorities and what policy steps might make those achievable. The danger on the other side is that government policy can get too caught up in picking winners, and not allow some true opportunities to flourish. These are national level issues, of course, and Punjab might look to what is already succeeding in other parts of India, and adapt some of those efforts for local circumstances. Large scale textile or garment manufacture might not make sense given Punjab’s size and location. But design-intensive, more customized products in this space might work, especially given demand and marketing channels that leverage the Punjabi diaspora. Some genres of Punjabi music and types of dance have become embedded in Bollywood movies, but the market for digital entertainment will only grow (what role AI plays in this remains to be seen). Religious or “heritage” tourism is a popular sector for policy makers to push, but it seems like something that can grow organically, without policy intervention – indeed, public policies will be needed to regulate tourism for its environmental and other distortionary impacts (for example, the Darbar Sahib in Amritsar becoming a site for countless selfies, videos and recordable antics).In any case, there are any number of opportunities for a more diverse economy in Punjab. As I noted, I am saying nothing new. Punjab tried to create a software industry in Mohali when India’s IT boom began at the turn of the century. But corruption led to firms relocating to Chandigarh. But the evolution of digital technology keeps throwing up new opportunities, and fresh starts are being made. Local universities have come up or improved, providing local human capital that was scarcer 25 years ago. Besides controlling corruption, there are obvious things that government policy can do, such as providing local infrastructure, both physical and digital, and streamlining regulations. These things are well understood.Around the time of the Covid-19 pandemic, experienced senior bureaucrats in the Punjab government worked with the state’s political leadership to create an “Expert Group” for revitalizing the Punjab economy. As one of that large group, I saw how effective policymaking can work. The group included academics, nonprofit leaders, bureaucrats or ex-bureaucrats, and corporate leaders. Often the nonprofit leaders had corporate experience. There was a great deal of quiet, backchannel interaction, focusing on any number of microlevel policy nudges with implementable detail, so that the report mostly reflected a concrete and “doable” set of recommendations. Of course, there were strategic discussions as well, but they did not remain as wish lists, but were used to make specific policy recommendations.The partial exception was agriculture. A large number of detailed, specific recommendations for improving efficiency and raising productivity in Punjab agriculture were overwhelmed at the state government level by recommendations that (perhaps naively) involved tinkering with the wheat-rice production and revenue model. These recommendations were meant to chart a path to efficiency, not to replace the wheat-rice system. But it was automatically a political hot potato (made worse by the farmers’ protests then going on) and the section on agriculture was removed from the final report.What happened to the report? I do not know which recommendations were finally implemented. The overall report is available, though I was unable to track down detailed sectoral background reports. Unfortunately, jockeying for power within the party then ruling the state led to the Chief Minister’s removal by his party’s “central command,” and there was a period of disarray, and ultimately a change of ruling party after the next election. These are the normal perils of Indian democracy, but what occurred and when was especially unfortunate, given Punjab’s somewhat urgent situation.Something good did come out of the report, however, that is continuing. The government made a small investment in creating the brainchild of one of the Expert Group members – Innovation Mission Punjab. As far as I can tell, this organization has made, and continues to make, a difference in imparting entrepreneurial skills, mindsets and support to as many would-be Punjabi entrepreneurs as possible. There is as yet no quantitative assessment of this initiative’s impacts, but my sense is that it is exactly what Punjab needs – illuminating possible paths forward for its people, and giving them the tools to navigate those paths once illuminated.There are other ways forward as well. Sanjhi Sikhiya is a Punjab-based organization working to improve education quality in rural primary schools, as well as bring related improvements to local government. It also runs a youth leadership program. Roundglass Foundation, based in the US, but with a growing presence in Punjab’s villages, is, in practical ways, empowering populations in those villages, especially women and children, to take greater charge of their lives and their communities. Punjab is a fertile ground for rejuvenating civil society in ways that bypass the hierarchies and asymmetries of power that were entrenched and hardened by the wheat-rice procurement economy. I am sure there are other initiatives that I am unaware of.The point is that Punjab can be saved, if it is given the opportunity to do that. I am not saying that Punjabis are special in that respect. People in any society that is not completely dysfunctional will strive to make their lives better, collectively as well as individually. The problem is when the interests and understanding of political and corporate leaders work against those imperatives. In Bengaluru, dysfunctional local and state government led to an initiative (catalyzed by one of the founders of Infosys, and unfortunately short lived) that gave the city’s residents a voice in improving life in the city. Punjab’s towns and cities have been dominated by its often-dysfunctional state government, and while the initiatives I highlighted were focused on villages, there is scope for citizen initiatives in urban settings as well as the rural. Again, this is an area where the national government can nudge the state government in the right direction, since it has resources that the state government completely lacks.Interestingly, going back to the comparison between the economic status of Sikhs and non-Sikhs that catalyzed my last blog, it is arguable that the wheat-rice procurement economy created a rural-urban polarization that had an unfortunate alignment with religious divides. Even more obviously, it exacerbated hierarchical inequalities tied to land ownership and caste. If this is the case, a more diversified economy has the potential to reduce polarization and fragmentation. If my reading is correct (and it is admittedly not based on “hard” data), the wheat-rice procurement economy contributed not only to the degradation of the environment and of governance institutions in the state, but also to greater polarization and the degradation of civil society.Can Punjab be saved? Yes, if the national government works quickly on updating its food security policy, including the wheat-rice procurement model. For this to be feasible, it has to cover the switching costs in multiple dimensions. The state government, only partly through its own fault, does not have the resources. Arguably, this fiscal disarray has come about partly because of the wheat-rice procurement system’s distortion of governance incentives.But why save Punjab? Even if the national government does not want to favor the residents of Punjab (why not other states that have had poor governance?), there is a national security case for helping to save Punjab, because of its geographic situation with respect to Pakistan and Kashmir. One can also emphasize the enormous costs of environmental degradation from the current system, which will not stop at Punjab’s borders.Of course, religious identities will not go away – Sikhs have had a complicated history within India, and the forces of secular modernity and Hindu nationalism (in more than one incarnation) will continue to pose challenges. But economic policies that reduce the salience of zero-sum games (“rivalrous goods”), will, I would argue, change what is too glibly and superficially blamed on “rivalrous gods.”Nirvikar Singh is Distinguished Professor of Economics, University of California, Santa Cruz.

Can Punjab save itself? Short answer is No

But can Punjab be saved? Yes, if the Centre updates its food security policy

Nirvikar Singh

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