Punjab in search of economic boost; all-party leaders rally for special package
At a recent Punjab all-party meeting convened by Governor Gulab Chand Kataria, the leaders unequivocally raised the issue of a Special Economic Package for the state.
The AAP led by CM Bhagwant Mann, the BJP by Sunil Jakhar, the Congress by Amarinder Singh Raja Warring and Brahm Mohindra and the SAD by Balwinder Bhunder and Daljit Cheema demanded that a Special Economic Zone be established in the state to boost investment, since Punjab is in the forefront of any conflict with Pakistan. It has always fought the nation’s war against cross-border smuggling of drugs and arms, besides suffering cross-border terrorism for decades, they said.
Also, when the neighbouring hill states were given special incentives in the early 2000s, whatever little industry Punjab had had taken flight to Himachal Pradesh and Uttarakhand. These factors have hit the state’s growth story hard, leading to near stagnation in its industrial and services sectors. Some of the senior political leaders, whose parties remained in power for long, also failed to garb the opportunity to usher in industrialisation because of their vote-bank politics.
But as Punjab fails to keep pace with other developed states, its polity seems to be rising from its slumber. Hence the demand for seeking help from the Centre. The governor has said that all-party leaders should meet the PM to impress upon him the need for economically incentivising the state. The question, however, remains as to why the Centre has refused to do so despite repeated requests by successive state governments.
Punjab, once among the most progressive states, is now counted among the laggards. In the just-concluded fiscal year, the state’s public debt has risen drastically to Rs 3.89 lakh crore, with a loan of Rs 36,971.37 crore having been raised in 2024-25 alone. The state has achieved just 89.7% of its targeted Revenue Receipts during the last fiscal, and spent 96.69% of the budget estimates as Revenue Expenditure.
Eminent economist Ranjit Ghuman says Punjab is a fit case for getting special incentives. “We have a 554-km-long border with a hostile neighbour. This makes Punjab the first state to bear the brunt of any hostility. As a result, six border districts have failed to see any growth. The per capita income in these districts is much lower than in rest of the state; education and health care are also in bad shape. Punjab’s debt has mounted with the state having the highest debt-to-GSDP ratio. Since the state is not capable of giving incentives and private investment has been difficult to come by, the Centre should come to its aid,” he adds.
It’s not that the Centre is giving an indifferent treatment to Punjab. The last Finance Commission had given it special revenue deficit grants. Considering the fact that Punjab is a border state, where a religious minority (Sikhs) is in majority, the BJP government and the party strategists would not alienate its people. However, the Centre wants an accountability from the state on using the resources.
The Centre also wants that the Punjab government, irrespective of the party in power, route all funds through the state’s consolidated fund to ensure that they are regularly audited and accounted for. In the past over a decade, the Centre has told successive state governments that the central grants would be given only if they stop the freebies, something the vote-bank-sensitive parties in power have failed to do.
