Punjab’s public discourse over the past several months has been consumed by sacrilege legislation, the film Satluj being dropped from a streaming platform, and the re-litigation of human rights cases from the 1980s and 1990s. While these matters deserve serious engagement, this should not be at the cost of everything else.
As noisy debates dominate television and social media, Punjab’s debt has crossed Rs 4 lakh crore. Farm organisations, meanwhile, continue to press, legitimately, for a legal guarantee for Minimum Support Price. Neither question gets the sustained attention the identity and historical-grievance debates do. A state cannot out-argue its way out of a fiscal crisis; it has to fix it, point by point.
Confront the debt
Punjab’s debt trajectory is unsustainable, and no programme for the state’s economic revival is credible unless it starts here. Three reforms would change the arithmetic without touching welfare benefits genuinely needed by the poor.
First, the free farm power subsidy, which costs around Rs 10,000 crore annually across roughly 14 lakh tubewells, should be retargeted so that only PM-Kisan-eligible farmers continue to receive it. Punjab had 11.34 lakh PM-Kisan beneficiaries in the April-July 2025 instalment cycle. On that basis, roughly 20 per cent of tubewell connections could shift to paid tariffs, freeing around Rs 2,000 crore a year.
This also bears on the MSP debate. Once power is priced for a category of farmer, that cost becomes a legitimate part of the cost of cultivation and should be reflected in the Commission for Agricultural Costs and Prices (CACP) formula. It should not sit outside the formula as a hidden subsidy. A statutory MSP guarantee that ignores priced-in power would rest on an incomplete cost base.
Second, Punjab State Power Corporation Ltd’s (PSPCL) Power Purchase Agreements (PPAs) with private generators, built around high fixed capacity charges regardless of power drawn, need more than marginal renegotiation. The state should create a statutory framework to cancel the most contentious PPAs, especially those signed without competitive bidding or later found to be one-sided, and refer them to the power regulator to set fair, cost-reflective replacement terms within a fixed timeline.
Third, GST enforcement should move away from raids and discretionary action toward forensic, AI-enabled audits that flag inconsistencies across returns, invoices and input tax credit claims. That would recover more from large defaulters while reducing harassment of small, compliant traders.
Fourth is a smaller but symbolically important step: dissolve the colonial-era Improvement Trusts that duplicate the functions of the Punjab Urban Development Authority (PUDA) town by town. Their land banks should be folded into a single professionally managed statewide authority. It would save administrative costs and, more importantly, remove dozens of pockets of discretionary land decision-making that function as informal patronage networks.
A state that visibly puts its own fiscal house in order also negotiates from strength, whether on Finance Commission devolution or NITI Aayog engagement, rather than from grievance.
Unlock the land market
A meaningful share of Punjab’s real estate transactions still occur through unregistered Agreements to Sell rather than registered conveyance deeds. This costs the state stamp duty revenue, clouds land titles and discourages formal investment. Making such agreements compulsorily registrable, with a reasonable transition period, would improve both revenue and market confidence.
A related step would be to share the windfall from Change of Land Use approvals with the small landowners whose farmland is absorbed at the urban periphery, instead of letting that value accrue entirely to developers. That would convert a chronic source of rural grievance into buy-in for planned urban expansion.
Rural credit deserves equal attention. The arhtiya commission-and-credit system functions as an invisible mortgage on much of Punjab’s farmland, with interest costs built into crop marketing arrangements that most cultivators cannot fully see or negotiate. A phased transition to transparent, bank-mediated crop credit, alongside a gradual reduction in arhtiya intermediation, would do more for farm household solvency than another loan waiver while costing the exchequer far less.
Remove the discretionary Raj
Two institutional reforms would unlock economic activity currently trapped by bureaucratic discretion. One pertains to bus permits, the other to Punjab’s cooperative sector.
Bus route permits remain allocated through an opaque process that weakens last-mile connectivity for workers and traders in smaller towns. Allocating them through competitive e-auctions could help solve the problem.
Then there is Punjab’s cooperative sector (sugar mills, credit societies and marketing federations) which functions under departmental inspector raj. Adopting a Central Model Cooperative Act framework, transferring cooperative elections to the State Election Commission, and separating registration from dispute resolution would restore member autonomy and financial discipline to a sector that currently underperforms its potential.
Build growth engines, not announcements
Beyond fixing what is broken, Punjab also needs to build what does not yet exist at scale. A Punjab Start-up and Skills Mission anchored in Mohali, modelled on proven incubator practice, would help retain the technical talent it currently exports to Bengaluru, Toronto and beyond. But the mission cannot stop at Mohali. Agro-processing, dairy-tech and small manufacturing startups rooted in Punjab’s district towns need the same access to seed funding and mentorship.
Invest Punjab should shift from chasing headline announcements to systematically scaling the industrial winners already on the ground. They may be slower to announce, but they are more likely to deliver jobs.
Diaspora capital also deserves a more deliberate strategy. Punjab’s NRI population is large, prosperous and emotionally invested in the state, yet engagement with it remains largely ceremonial. What should be an investment pipeline is more like an annual convention.
A dedicated diaspora investment vehicle offering transparent, ring-fenced instruments for infrastructure and agro-industry, paired with a genuinely fast-tracked NRI facilitation office, would convert goodwill into capital.
Punjab also has underused opportunities in sectors such as aviation, tourism and dairy.
Patiala’s aviation infrastructure offers a credible platform for a pilot training and aircraft maintenance hub, addressing a nationwide capacity shortage. Religious and heritage tourism too is underexploited, particularly when it comes to encouraging visitors to stay beyond a single day. And dairy, long called Punjab’s “second harvest”, has never received the processing, branding and export investment that transformed comparable rural economies in Gujarat and Karnataka.
However, none of this will attract serious capital if basic infrastructure — roads, sewerage, water supply and solid waste management — continues to function below acceptable standards. District Planning Committees are largely dormant despite their constitutional mandate. They need reviving as the coordinating forum for rural-urban planning. It is unglamorous work, but it determines whether an investor’s second visit happens at all.
Focus on better river governance
With the Indus Waters Treaty in abeyance since April 2025, there is now a national conversation about developing the Western Rivers — the Indus, Jhelum and Chenab — for irrigation and hydropower within India, potentially through a central Western Rivers Development Authority.
Although these rivers do not flow through Punjab, any future linkage of Chenab or Jhelum waters with the Ravi-Beas system, or a broader reallocation of India’s western river entitlements, would have significant implications for the state’s long-term water and power security. That conversation is happening in Delhi with or without Punjab’s participation; the state has a direct interest in registering its position while the framework is still being written.
Punjab’s own river governance deserves equal urgency. Water security is a direct industrial and agricultural input, as well as an ecological concern. The Sutlej and Eastern Rivers Waters Authority of Punjab — a citizens’ draft for an independent, judicially led statutory authority covering the Sutlej, Beas, Ravi and Ghaggar — would be financed through a share of riverbed mining royalties and cesses on power utilities and bulk industrial water users, rather than from the state exchequer.
The proposed authority would tackle untreated effluent, unregulated sand mining and ad hoc water allocation, all of which periodically disrupt farm and industrial output. It also offers a model of self-financing institutions that Punjab could use elsewhere, given how little fiscal room the state budget has left.
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The perfect is the enemy of the very good
Punjab does not lack ideas for economic revival. If anything, it has too many, each claimed by one party and treated with suspicion by another. What it lacks is the discipline to implement what is achievable instead of waiting for the ideal.
Every measure suggested above is partial by design. The PPA framework will not fix PSPCL’s finances overnight. The diaspora vehicle will not replace budgetary reform. A river authority will not resolve Punjab’s water disputes on its own. That is no reason to wait for a comprehensive solution before taking action. Punjab should bank the very good and move on to the next measure.
Each step can be judged on its own terms. Has the CLU windfall rule been notified? Have bus routes been e-auctioned? Has the Improvement Trust merger been completed? Is the river cess being collected?
None requires a constitutional amendment, a court battle, or a television debate — only sustained administrative will, applied consistently, beyond a single news cycle.
The debt will not shrink, and the MSP debate will not be resolved through identity politics or louder television debates, however sincerely the underlying grievances are felt.
They will resolve the way most durable reform actually happens. Not through one perfect solution, but through the accumulation of very good measures, implemented and reported on year after year, regardless of which party is in government when the numbers finally move.
The author is a retired IAS officer of the 1984 batch, Punjab cadre, who superannuated as Special Chief Secretary, Government of Punjab. He writes at kbssidhu.substack.com. Views are personal.
(Edited by Asavari Singh)