Punjab is currently governed by the Aam Aadmi Party (AAP) under Chief Minister Bhagwant Mann, who achieved a remarkable electoral victory in 2022 by securing 92 out of 117 seats with 42.01% of the vote share. Mann, who represents the Dhuri Assembly constituency, has been serving as the state convener of AAP Punjab since 2019, bringing his experience as a former comedian and political activist to the chief minister’s office. His government has maintained stability in Punjab despite facing various administrative and policy challenges typical of any state administration.
However, the political atmosphere has become somewhat uncertain following AAP’s recent electoral setback in Delhi, where the party suffered a significant defeat to the BJP. The Delhi results, where the BJP won 48 of 70 seats compared to AAP’s 22, and the loss of party leader Arvind Kejriwal’s New Delhi seat, have raised questions about the party’s broader political trajectory. While this development has led to speculation about potential political realignments and their impact on Punjab, Mann’s government continues to operate with its substantial legislative majority intact.
Economic Performance and Challenges
Punjab’s economic position presents a complex picture of both strengths and persistent challenges. The state ranks 16th among Indian states with a GDP of ₹8.91 lakh crore (approximately US$110 billion) projected for 2025-26, while maintaining the distinction of having the highest per capita GDP in India at US$2,720. The state’s Gross State Domestic Product (GSDP) for 2025-26 is projected at ₹8,91,301 crore, representing a 10% growth over the previous year, indicating positive momentum in economic activity.
Despite these impressive headline figures, Punjab’s economy faces significant structural challenges that have hindered its long-term growth potential. The state’s economic growth has been declining, dropping to just 2.4% in 2023-24, which reflects deeper underlying issues, including slow industrial development, environmental degradation, and social challenges. Economists have diagnosed Punjab’s economy as suffering from ‘Dutch disease’—a condition where heavy dependence on one dominant sector, in this case agriculture, has prevented the state from successfully transitioning toward industrialisation and economic diversification.
Investment and Development Initiatives
The current government has been actively working to address these economic challenges through various policy initiatives and investment promotion activities. Foreign Direct Investment (FDI) inflows have reached ₹10,356 crore (US$1.209 billion) between October 2019 and February 2025, indicating some success in attracting external capital. Mann’s administration has recently formed 24 advisory panels specifically designed to boost industrial growth and attract investment across key sectors including food processing, textiles, automobile components, and manufacturing.
These initiatives represent a recognition that Punjab needs to leverage its existing advantages—including its agricultural base, strategic geographical location, rich cultural heritage exemplified by attractions like the Golden Temple, and skilled workforce—while simultaneously building new economic pillars. The state’s challenge lies in executing these development plans effectively while managing the political uncertainties that may arise from broader national political dynamics. Punjab appears to be at a critical juncture where the stability of the current government and its policy continuity will be crucial for addressing the long-term structural economic challenges that have constrained the state’s growth potential.