Punjab Budget: Welfare measures earn plaudits but industry leaders sound alarm over ‘debt trap’, farmers allege neglect

“We welcome the Punjab Government’s Industrial Policy 2026 and the progressive vision outlined in the state budget. The allocation of Rs 500 crore towards fiscal incentives, continued subsidised power support to industry, and the Fast Track Punjab Portal for single-window clearances are the kind of structural enablers that allow companies to plan investments with confidence. The participatory approach taken through the Punjab Udyog Kranti Initiative is a right step towards meaningful governance-industry collaboration,” he said.

However, Pankaj Sharma, president of the Association of Trade and Industrial Undertakings (ATIU), Ludhiana, said the budget reflected growing fiscal stress in the state.

“The total size of the Punjab Budget has been placed at around Rs 2.05 lakh crore, but the structure of the budget raises serious concerns. A significant portion of the state’s revenues is already pre-committed towards salaries, pensions, subsidies and interest payments, leaving very limited fiscal space for productive investments that can generate growth and employment,” he said.

“The fiscal deficit is estimated at nearly Rs 33,000–34,000 crore, which is close to 4 per cent of the state’s Gross State Domestic Product (GSDP), substantially higher than the prudent fiscal benchmark of 3 per cent. Continued dependence on borrowing is pushing the state into a deeper debt cycle,” he added.

Sharma added that Punjab’s total outstanding debt is expected to reach nearly Rs 4 lakh crore, with an annual interest burden of Rs 24,000 crore. According to him, nearly one in four rupees of the state’s revenue is spent servicing past debt.

He also pointed out that capital expenditure is estimated at only Rs 13,000–15,000 crore, barely about 7 per cent of the total budget outlay, which he said is inadequate for a state facing stagnation in industrial growth and infrastructure gaps.

Key manufacturing sectors

From an industrial perspective, Sharma said the budget does not adequately address challenges faced by Ludhiana’s key manufacturing sectors. The hosiery and garment industry continues to face global competition, rising logistics costs, and policy uncertainties, yet the budget does not provide major incentives, export promotion schemes, or support for technology upgrades.

Similarly, the bicycle and bicycle parts industry, a globally recognised cluster in Ludhiana, continues to struggle with outdated infrastructure, rising input costs, and competition from low-cost manufacturing economies, with no clear policy support in the budget.

Farm organisations were also critical of the budget. Prem Singh Bhangu, president of the All India Kisan Federation and a leader of the Samyukt Kisan Morcha, termed it an “election budget”.

“The Punjab budget is an election budget prepared keeping in view the 2027 Assembly elections. The budget has failed to address basic issues such as the deepening agricultural crisis, water scarcity, and environmental pollution. Out of the Rs 2.60437 lakh crore budget, there is a mere allocation of Rs 15,377 crore for the agriculture sector, which is insufficient to address the vital issues faced by farmers,” he said.

Bhangu added that the budget has no provision for waiving farmers’ debt, boosting diversification, or ensuring remunerative MSPs based on the C2+50 per cent formula for crops, fruits, vegetables, and Basmati.

Measures for women

Industry representatives also said the focus should now shift to implementation. Lakhminder Dicky Chhabra, convener of the United Cycles Parts and Manufacturers Association, welcomed the government’s welfare measure for women.

“Being a woman, I welcome the financial support of Rs 1,000 per month for women. It is a meaningful step towards recognising their role in the social and economic fabric of Punjab. This commitment was discussed earlier but has remained unfulfilled over the past four years. With one year left in the current term, there is hope that it will now be implemented in the best possible manner,” she said.

From the healthcare sector, Dr Divyanshu Gupta, secretary of the Private Hospitals and Nursing Homes Association, welcomed the increased allocation for the Mukhmantri Sehat Bima Yojana.

“I welcome the Punjab Government’s decision to increase the budget for the scheme, particularly the allocation of around RS 2,000 crore,” he said, adding that the scheme ideally requires Rs 2,500–3,000 crore for smooth functioning so that hospitals can continue providing quality treatment.

The association has requested that the Punjab Government increase the scheme’s budget, allow all packages in both government and private empanelled hospitals, and adopt a patient-centric referral policy so that the scheme’s true purpose—providing accessible, high-quality healthcare to the people of Punjab—can be achieved.