Punjab Leaders Unite in Push for Special Economic Package Amidst Mounting Debt Crisis

• May 13, 2025

In a rare display of political unity, leaders from all major political parties in Punjab came together on Saturday at an all-party meeting convened by Governor Gulab Chand Kataria. The meeting aimed to press the Central Government for a Special Economic Package, highlighting the state’s growing economic challenges and urgent need for federal intervention.

Broad Political Consensus

The meeting saw the participation of key political figures including:

• Chief Minister Bhagwant Mann (Aam Aadmi Party),

• Sunil Jakhar (BJP state president),

• Congress leaders Amrinder Singh Raja Warring and Brahm Mohindra,

• Shiromani Akali Dal’s Balwinder Singh Bhunder and Dr Daljit Singh Cheema.

The demand for a Special Economic Zone (SEZ) in Punjab was central to the discussion, as leaders underscored the need to attract investment and reverse industrial decline.

Why Punjab Is Asking for Central Help

Punjab’s economic distress is multi-faceted:

• Geopolitical pressures: The state shares a 554 km border with Pakistan and has long borne the brunt of cross-border terrorism, arms smuggling, and drug trafficking.

• Industrial migration: In the early 2000s, central incentives to neighboring hill states like Himachal Pradesh, Jammu & Kashmir, and Uttarakhand caused a significant shift of industry away from Punjab.

• Stagnant sectors: The exodus of industries led to long-term stagnation in Punjab’s manufacturing and services sectors.

• Neglect of industrial policy: Prolonged focus on agricultural vote banks by successive governments further sidelined industrial development.

Despite repeated requests—including during pre-budget meetings—the Centre has so far not approved a comprehensive special economic package for the state.

The Fiscal Reality

Once among India’s most progressive states, Punjab is now grappling with dire fiscal challenges:

• Public debt stands at ₹3.89 lakh crore, with ₹36,971 crore raised in FY 2024–25 alone.

• The state met just 89.7% of its targeted revenue receipts but spent 96.69% of the budgeted revenue expenditure.

• The revenue deficit target of ₹29,688 crore for FY 2024–25 has already been exceeded.

Economist Ranjit Singh Ghuman has strongly advocated for special central assistance, citing the economic and security burden placed on Punjab, especially in its underdeveloped six border districts that lag significantly behind the state average in per capita income, education, and healthcare.

The Centre’s Stand

While the Centre has provided special revenue deficit grants in the past and recognizes Punjab's strategic significance, it maintains strict conditions:

• All central funds must be routed through the state’s consolidated fund for accountability and audits.

• Central aid is contingent on states refraining from unsustainable populist schemes and freebies, a policy stance that Punjab’s political leadership has so far resisted.

Despite these challenges, the Governor has urged all parties to collectively seek a meeting with Prime Minister Narendra Modi to make the case for Punjab’s economic revival.