Between 2022 and 2025, Punjab’s economy moved through a period of cautious recovery mixed with deep structural stress. On the one hand, the state’s Gross State Domestic Product (GSDP) expanded steadily in nominal terms, pushing per-capita income upward year after year. On the other hand, Punjab’s fiscal foundations continued to weaken under the weight of high deficits, rising debt, and large annual repayment obligations. This combination created a situation where the size of the economy was growing, yet the state’s ability to invest in development remained restricted. Understanding this period requires looking not only at headline numbers but at agriculture, industry, revenue patterns, and long-term vulnerabilities.
Punjab’s nominal GSDP increased each year from 2022 to 2025, recovering from the slowdown that followed the pandemic. Budget estimates projected that, by 2024–25, the size of Punjab’s economy would cross ₹8 lakh crore in nominal terms. This growth helped raise the state’s per-capita income, which climbed from about ₹1.8–1.9 lakh in 2021–22 to nearly ₹1.95 lakh in 2023–24, with further increases estimated for 2024–25. These numbers place Punjab above many Indian states in terms of average income, reflecting a historically strong economic base. However, the rise in per-capita income was largely nominal, partly driven by inflation, and did not always translate into proportional increases in real purchasing power for ordinary families.
While GSDP and income figures show progress, Punjab’s fiscal health during this period deteriorated. The state consistently recorded high fiscal deficits—around 5 percent of GSDP in 2022–23 and 2023–24—which meant that year after year, Punjab borrowed heavily to meet its expenditure needs. A significant share of these borrowings did not fund new development projects but were instead consumed by repayments of old debt. In 2024–25 alone, the government allocated nearly ₹70,000 crore purely for debt repayment, a figure that illustrates how past liabilities have grown into a major burden on present finances. As a result, debt servicing has increasingly eaten into the state budget, leaving less room for capital spending on roads, health facilities, education infrastructure, industry support, or agricultural modernization.
The mismatch between Punjab’s revenue generation and expenditure commitments lies at the heart of this fiscal pressure. While the state collects taxes through GST, excise, stamp duty, and other sources, its revenue base has not grown fast enough to match its spending obligations. Large portions of the budget go towards salaries, pensions, subsidies, and interest payments—expenditures that are difficult to reduce due to administrative, social, and political constraints. Even though the government attempted reforms and stricter financial discipline, the structural imbalance between income and expenditure continued, pushing public debt upwards each year. This situation increased rollover risk, meaning Punjab constantly needed new loans to pay off old ones.
Sector-wise, Punjab’s economic structure during 2022–2025 continued to show both strengths and weaknesses. Agriculture remained the backbone of the state, supporting a large proportion of the population. Yet, reliance on the wheat-rice cropping cycle, groundwater depletion, low diversification, and rising input costs limited income growth for farmers. Industrial growth was mixed: cities like Ludhiana, Jalandhar, Mohali, and Bathinda retained strong SME clusters, but many small industries struggled with credit access, outdated technology, and competition from other states. The services sector expanded steadily—especially in education, transport, retail, and healthcare—helping drive overall GSDP growth, though not always generating high-quality jobs for the youth.
The employment picture during these years reflected these structural challenges. Official unemployment rates varied by survey, but under-employment, especially among rural youth, remained high. Job creation did not keep pace with the aspirations of Punjab’s educated young population, contributing to increasing migration abroad. Although Punjab’s social indicators such as literacy, life expectancy, and access to basic services remain better than many states, rising private education and healthcare costs, coupled with limited job opportunities, put pressure on household finances. Thus, even as per-capita income rose in nominal terms, many families continued to feel economic stress.
By 2025, a clear pattern had emerged: Punjab’s economy had size and potential but was constrained by debt, deficits, and structural imbalances. High debt servicing costs meant that the government could not invest adequately in growth-enhancing sectors like agro-processing, manufacturing modernization, skill development, and infrastructure. Agriculture required a decisive shift toward diversification, but the pace of reform remained slow. Industry required stronger policy support, easier credit, and better logistics. Meanwhile, the state needed a broader revenue base and cleaner fiscal strategies to break the cycle of borrowing for repayment.
Looking ahead, Punjab’s path to sustainable economic health will depend on improving revenue collections, bringing deficits under control, and focusing public spending on long-term productivity rather than short-term obligations. A planned shift towards high-value agriculture, new industrial clusters, and a stronger service economy could restore dynamism. Equally important will be debt management, transparent financial planning, and targeted support to sectors that create stable employment. Without these shifts, Punjab risks carrying its growing debt burden into the future, limiting its ability to provide opportunities to its people.