To reshape its economic landscape, the Punjab Government on Monday submitted a comprehensive roadmap to the 16th Finance Commission, seeking to limit subsidies until 2031 and requesting substantial financial support to achieve this goal. Punjab Chief Minister Bhagwant Mann has outlined an ambitious plan to reduce electricity subsidies through solarization, a project that necessitates significant investment. To this end, Mann has called for a special package amounting to Rs 1,32,247 crore to foster the state's holistic development.
The Chief Minister presented the memorandum to the Commission’s chairman Dr Arvind Panagariya and members, emphasizing Punjab's pivotal role in making India self-sufficient in food production and its historical contributions to the nation's independence. Mann highlighted the pressing need for a special economic package, asserting that such support would catalyze Punjab's economic growth and bolster its infrastructure.
Currently, Punjab spends approximately Rs 21,000 crore on subsidies for free and affordable electricity to farmers, industrialists, among others — a sum comparable to the state's GST revenue. The proposed solarization initiative aimed at alleviating this financial burden, enhancing the reliability of the state's power infrastructure in the long run. However, implementing this initiative will require substantial funding from the Central Government.
In addition, the Chief Minister has requested Rs 75,000 crore for development projects, Rs 17,950 crore for agriculture and paddy diversification, Rs 5,025 crore to combat stubble burning, and Rs 8,846 crore to address narco-terrorism and drug abuse.
Furthermore, Mann has sought Rs 6,000 crore for industrial revitalization, Rs 9,426 crore for urban local bodies, and Rs 10,000 crore for rural local bodies.
Punjab's unique challenges, particularly as a border state facing narco-terrorism and hostile border activity, were also brought to the Commission's attention. Mann underscored the necessity of modernizing the state police force, which plays a crucial role in maintaining national security. Additionally, the Chief Minister highlighted the innovative Sadak Surakhya Force (SSF), which has already saved over 1,000 lives since its inception in February 2024.
Addressing the state's agricultural crisis, Mann stressed the urgent need for crop diversification to conserve groundwater, which is rapidly depleting. The Finance Commission's recent approval of a proposal to incentivize crop diversification by providing Rs 17,500 per hectare to farmers marks a significant step towards breaking the two-crop cycle and promoting sustainable farming practices, he added.
Mann noted that the Punjab Agricultural University, renowned for pioneering the Green Revolution in India, is now spearheading efforts to promote crop diversification under the leadership of world-acclaimed tissue culture experts.
The state’s farmers have historically contributed immensely to India's food security by over-exploiting Punjab's fertile soil and water resources. However, this has led to almost all blocks of the state falling into the black zone in terms of groundwater levels. Mann expressed deep concern over this issue, comparing the high-powered motors used for extracting groundwater in Punjab to those used for oil extraction in Dubai and other Gulf nations. He emphasized the need to shift towards using canal water for irrigation, which has increased from 30 to 70 percent under the current government, thereby conserving groundwater and reducing the burden on the state exchequer.
Punjab's industrial sector is also poised for growth, with major companies like Tata Steel showing interest in investing in the state. However, the tax holidays offered by other states pose a challenge to Punjab's industrial expansion. To counter this, the state government has introduced innovative measures such as color-coded stamp papers to facilitate business operations and attract entrepreneurs. Punjab is the first state to introduce green-colored stamp papers to ease the process for entrepreneurs setting up their units, marking a revolutionary step towards industrial growth.
In his appeal to the Finance Commission, Chief Minister Mann emphasized the importance of recognizing Punjab's unique challenges and extending the necessary support to overcome them. He asserted that with the Commission's guidance and financial assistance, Punjab can revitalize its economy, achieve sustainable development, and restore its former glory.
Mann also highlighted the state's commitment to transparent governance and efficient resource mobilization. In the last two years, the state's own tax revenue has seen impressive growth, surpassing national growth rates. GST revenue has increased by 33 percent, and excise revenue has risen by more than 50 percent, thanks to robust administration and honest governance. The State Government is also reviewing various expenditure items and rationalizing unproductive expenditure to improve financial stability.
The Chief Minister pointed out that many of Punjab's problems are legacy issues resulting from ill-advised political decisions by previous governments, such as the Rs 30,584 crore CCL Loan taken in March 2017 and substantial untargeted subsidies given right before elections in 2021. “These actions have had long-lasting repercussions on the state's economy. Despite these inherited challenges, the current government is making concerted efforts to achieve financial consolidation and create a vibrant, prosperous ‘Rangla Punjab’,” he said.
Mann concluded by reaffirming Punjab's resilience and determination to rise above adversity, expressing confidence that with the Commission's support, the state will continue its journey towards prosperity and economic stability. He reiterated the state government's commitment to restoring Punjab's pristine glory and emphasized that no stone will be left unturned in this noble cause.
Punjab demands…
· Rs 1,32,247-cr special package for holistic development
· Funds for Solarization to reduce electricity subsidies
· Development Funds worth Rs 75,000 cr
· Rs 17,950-cr for agriculture and paddy diversification
· Rs 5,025-cr for Stubble Burning
· Rs 8,846-cr for Narco-Terrorism and Drug Abuse
· Rs 6,000-cr for Industrial Revitalization
· Rs 9,426-cr for Urban Local Bodies
· Rs 10,000-cr for Rural Local Bodies
· Modernization of the State Police Force to combat narco-terrorism and hostile border activity
· Tax Structure Reforms due to revenue losses after GST implementation
· Revenue Deficit Grant to compensate for investment losses as a border state
· Support for Crop Diversification to promote sustainable agriculture and conserve groundwater
· Funding for Canal Water Usage to reduce reliance on groundwater for irrigation
· Support for Industrial Growth and countering challenges posed by tax holidays in other states
