With just days left before the Union Budget is presented on February 1, Punjab has made its case for a comprehensive financial package to address the state’s most pressing needs. In a detailed letter to Union Finance Minister Nirmala Sitharaman, Punjab Finance Minister Harpal Singh Cheema has outlined a bold wishlist aimed at transforming agriculture, bolstering infrastructure, promoting industrial growth, and financial sustainability. From a special budget to support crop diversification to incentives for farmers tackling the stubble burning crisis, from reimbursement of pending dues to industrial incentives for reviving its economy, Punjab’s demands are designed to secure both immediate relief and long-term sustainability.
At the heart of the state’s priorities is the urgent need for financial support to diversify Punjab’s agriculture, which has long been reliant on paddy cultivation. The government believed that a shift to alternative crops could unlock substantial savings for the Centre while addressing critical environmental concerns. Punjab is also calling for Rs 2,000 per acre to incentivize farmers to manage crop residue responsibly, along with the release of Rs 8,000 crore in pending Rural Development Funds (RDF), which would significantly enhance the state’s rural infrastructure.
As the Union Budget approaches, Punjab has made a strong case for financial assistance, policy support, and structural reforms that align with the state’s economic realities. With issues ranging from agricultural distress and rural infrastructure to industrial revival and security concerns, Punjab hopes that the upcoming budget will address its long-pending requests. The response from the Union Government will be crucial in shaping the state’s fiscal roadmap for 2024-25.
Crop Diversification
A major component of Punjab’s demand revolved around shifting away from excessive paddy cultivation to more sustainable cropping patterns. The government estimated that diversifying 10 lakh hectares from paddy to alternative crops could help the Centre save approximately Rs 28,000 crore annually by reducing rice procurement costs, fertilizer subsidies, and power subsidies.
Cheema has urged the Centre to allocate a “dedicated diversification budget”, which could be matched by the Punjab Government using the savings generated from the shift. The state is also seeking reimbursement of procurement-related expenses to ensure financial stability for its procurement agencies.
Incentive for Farmers Who Avoid Stubble Burning
To tackle the issue of air pollution caused by stubble burning, Punjab has sought an Rs 2,000 per acre incentive for farmers adopting crop residue management (CRM) practices. Of the total estimated cost of Rs 2,000 crore, the state has proposed that Rs 1,600 crore be borne by the Centre, while Punjab will contribute the remaining Rs 400 crore.
The State Government claimed that it has already provided 1.45 lakh CRM machines but believed that the direct financial support to farmers is crucial to cover additional costs like tractor rental, fuel, and labour.
Power Sector Relief
Punjab has reiterated its request for an additional 0.5 percent borrowing allowance to support power sector reforms, as recommended by the 15th Finance Commission. However, the Centre has ruled out carrying forward the unutilized borrowing limit from previous financial years. Cheema has urged the Union Government to reconsider, arguing that Punjab remains eligible for this borrowing from the financial year 2021-22 to 2024-25, and needs additional resources to strengthen its power infrastructure.
Reimbursement of Rs 8,000-cr RDF
A long-standing demand of Punjab is the release of the Rural Development Fund (RDF) — a levy on grain procurement meant to finance rural infrastructure projects like roads and market facilities. Cheema pointed out that the Centre withheld Rs 8,000 crore in RDF payments over the past three years, severely impacting Punjab’s rural development.
Punjab has pointed out that while the provisional cost sheet for grain procurement does not include RDF, the state has consistently requested a three percent allocation for RDF in procurement cost calculations.
Special Industrial Incentives for in Border Districts
To boost industrialization in Punjab, Cheema has demanded special incentives for MSMEs in six border districts — Amritsar, Ferozepur, Gurdaspur, Pathankot, Fazilka, and Tarn Taran. He argued that Punjab should be given benefits similar to those extended to Jammu and Kashmir and Himachal Pradesh, considering its border proximity and economic vulnerabilities. Cheema believed that providing industrial subsidies and tax incentives in these districts will curb brain drain, generate local employment, and enhance economic stability.
Vande Bharat between Bathinda-Delhi
While Punjab recently secured a Vande Bharat Express service between Delhi and Amritsar, the state has now requested an additional high-speed train linking Bathinda with Delhi. Bathinda serves as Punjab’s agricultural and commercial hub, and better rail connectivity will benefit farmers, traders, and businesses in the Malwa region.
250 e-Buses
Punjab has sought Rs 300 crore as financial assistance to introduce 250 electric buses in 2025-26, along with the development of charging infrastructure. The state aims to promote eco-friendly urban transport, reduce vehicular pollution, and modernize its public transport system.
Border Security, Policing Infrastructure
With a 553-km-long border with Pakistan, Punjab has highlighted the need for stronger policing and security measures. The state has sought Rs 1,000 crore to upgrade police infrastructure in border districts; procure high-end vehicles and surveillance equipment; construct 30 new police stations and six police lines; and to build housing and hostel facilities for police personnel.
Higher Housing Grants under PM Awas Yojana
Punjab has proposed increasing the Rs 1.2 lakh grant per house under PM Awas Yojana (Gramin) to Rs 2.5 lakh, citing rising construction costs. The state argued that the current grant is insufficient to construct even a 25-square-meter house.