Economic Development of the Indian State of Punjab: Prospects and Policies

Lakhwinder Singh, Nirvikar Singh and Prakarsh Singh
Additional contact information
Lakhwinder Singh: Institute for Human Development, New Delhi and Punjabi University, Patiala, Punjab
Nirvikar Singh: University of California, Santa Cruz, USA
Prakarsh Singh: Plaksha University, Mohali, Punjab

India Policy Forum, 2025, vol. 21, issue 1, 200-259

Abstract: This paper assesses the state of Punjab's economy, reasons for its current situation, prospects for growth, and policies to enable that growth. Punjab's economy is characterized by slow growth, societal challenges, and environmental degradation. We identify four interrelated issues that act as constraints on the Punjab economy. First, driven largely by dependence on the Central Government's food procurement policy, and its specific nature, the state remains heavily agricultural in a narrow manner. Second, Punjab's fiscal situation is constrained in ways that make fiscal policy dysfunctional: related causal factors include the agricultural structure and the state's political economy. Both physical and soft infrastructure have been negatively affected by the problems in public finances. Third, a combination of regional and domestic politics during an era of liberalization has disadvantaged the state, with existing manufacturing industries declining, and new industries and services not emerging rapidly enough. Fourth, both individual human capital and institutional or organizational capital have either failed to develop, or have deteriorated in some dimensions over recent decades, making Punjab less innovative and less attractive for new investment. The paper argues that prospects for meaningful economic development in Punjab will depend on collaboration between the state and national governments, including fiscal support from the latter to deal with switching costs and accumulated fiscal issues. We also discuss several specific policy areas, including agricultural diversification, industrial development and innovation, cross-border services, and decentralization to the local level.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ncaer.org/publication/india-policy-forum-2024/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nca:ncaerj:v:21:y:2025:i:2025-1:p:200-259

Access Statistics for this article

India Policy Forum is currently edited by B Ramesh

More articles in India Policy Forum from National Council of Applied Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by B Ramesh ().