Punjab in 2017 is a Small State in Big Trouble

2017 and bale-bale Punjab is in trouble.

Who made this trouble and how was all this trouble concocted?

As it turns out, the recipe for Punjab’s trouble is quite simple. And we are not talking about  trouble of the small-time variety seen at the level of individuals.  We mean Trouble with a Capital T; the kind of trouble that takes down an entire state and It’s eventually an entire nation.

Let’s start with the ingredients

One small state. Let us be specific here. The state we have in mind has 5036 thousand hectare (50362 square kilometers). Of this, 4145 thousand hectare – or 82 per cent — are arable.

Next, add population. With a total population 2,77,43,338 (2011 Census) Punjab’s population is 2.30% of the total population of India, giving Punjab Rank #16 out of India’s 29 states. between 1911 and 1951 Punjab had negative population growth but from independence onward population growth for every single decade has been about 20 per cent.  The decadal change i.e. increase in population from 2001 to 2011 is 13.89%. The state’s total rural population of Punjab is 1,73,44,192  which is 62.5 per cent of total population. Agriculture workers number 35.55 lakh and all other workers number 91.27 lakh. The percentage of agriculture workers to total workers is around 39 per cent.

Even if there were no other trouble-making ingredients, the combination of a fixed, and relatively small, area with a population growing 20 per cent every ten years, is enough to trigger economic disaster. Economic hardship inevitably destabilises politics and society.

In terms of agriculture, the land simply cannot absorb more people. Already the average land-holding is 3.77 acres. By the calculations of economists at Punjab Agricultural University, a farmer growing wheat and rice cannot break even if he cultivates less than 6 acres. Bear in mind, that the latest Economic Survey of Punjab found that 65 per cent of rural households are landless. These landless persons are the ones who do the actual field labour. They live from hand to mouth and when the farmer is in financial difficulty they starve.

Small State in Big Trouble

Two ways to avert this trouble would be to …

  • Enforce strict control on population growth. This measure can be successfully adopted in a dictatorship – China did it. India is a democracy and a soft state at that. Enforcing controls of any sort is difficult here. A one-child norm is not going to happen.
  • Enable surplus population to shift from agriculture to industrial or service occupations. This remedy would require equipping people with marketable skills through education. As a percentage of the total annual Punjab budget, the allocation for primary education has declined every year since 1975. There are very few jobs that do not require at least a Class X qualification. In other words, a huge number of rural youth have no employment option beyond casual labour.

But let us imagine that a miracle happens and the state of Punjab makes education its Number One Priority over the next 20 years. Year by year, an increasing percentage of the population – especially the rural population – becomes hire-able.

Yeah ! Punjab is pulling itself up by the boot-straps … turning the economic corner !

Well, yes, but … As all other Indian states, the Punjab government is the largest single employer. On August 15 Chief Minister Amarinder Singh announced that his government had decided to provide jobs to 50,000 youth. He did not say where these jobs were going to come from. In a September 5 broadcast, a television channel, News 18, put out some interesting figures:


Number of Punjab employees to be paid salaries3.95 lakh 3.95 lakh
Salary burden every month Rs 2200 cr
Tax share to come from central government Rs 900 cr
Tax share received from central government Rs 0
Own resources to be generated by Punjab for salary Rs 1300 cr


from these figures,

It is clear that the Punjab government’s resources are barely able to cover salaries to its present workforce. The only sure way that the government could create 50,000 jobs would be to hire that number. If that were done, then the Chief Minister would have to announce something like “I said I would give employment to 50,000 but I never said they would be paid.


Small State in Big Trouble

How about non-government jobs? Does Punjab have the industrial, commercial and service industries to absorb people? In March this year Business Standard reported that in a seven year period (2007 to 2014) about 18,770 factories in the state closed. How many more industries packed up between 2014 and now? Commerce shows healthy growth when people have money to spend. Twenty years ago Punjab’s per capita income was the highest in the country; by 2016 Punjab had slipped to Rank 16 out of all states.

Education is costly and the youth of Punjab who receive an education up to graduate or post-graduate level are privileged. Spending so much on education makes sense only when they can eventually recoup the investment thanks to enhanced earnings. Today this privileged section knows very well that the employment options are much better outside Punjab – and preferably outside India. This explains one of Punjab’s very few thriving businesses, namely operators claiming to prepare students for IELTS exams. These businesses are training youngsters to get out of the state.

There are two  other thriving businesses in Punjab (in all of India actually). One of them is the security guard business. Rising poverty + inadequate/unreliable police force = insecurity. Insecurity fuels a demand for private guards. [The private guard business makes for an interesting calculation. A private guard earns around Rs 10,000 per month. As the cost of living rises, the guard’s real income declines. If it declines far enough fast enough, the guard will conclude that it is worth the risk to pilfer from his employer or aid others to do so. A good economist should be able to work out a formulat to determine the exact tipping point when a security guard becomes a security threat.}


At the outset we mentioned a recipe for big trouble. So far, we have given only two ingredients. There are several other ingredients that give Punjabi Big Trouble its unique flavour.

Another ingredient is the rapid degradation of Punjab’s primary resources, namely land and water.

Virtually non-existent pollution control over decades has poisoned the soil. The ground is soaked in industrial effluents and agricultural chemicals. It cannot be a coincidence that cancer is rampant. The stone-hearted may welcome the enhanced death-rate as a counter-balance to the birthrate. Certainly it is a way to redistribute wealth. Affected families sell everything to treat hopeless cases thereby passing wealth to doctors, hospitals, pharmaceutical and insurance companies. Medical treatment is the third thriving business in Punjab. Grand new private hospitals are everywhere.


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