Punjab, the province which is known to the people as the breadbasket of India, is home to 30 million people. But in recent decades, there has been an increasing trend of emigration among the youth who now prefer to move to other parts of the globe for their studies and work ventures. More than 262,000 students and at least 500,000 job seekers have emigrated from Punjab since 2016. These numbers are the third highest in the country after Andhra Pradesh and Maharashtra but the income groups of the people in question differ greatly. Let’s take a deep dive into the current situation in Punjab with a focus on the question: Why are Punjabis emigrating?
Let's understand Punjab and its issues first.
The Agriculture
Punjab has been an agricultural state since the independence of India, and unfortunately, it still remains the same. Before the 1970s, at least 21 types of crops were grown, but after the provision of MSP during the green revolution, farmers of Punjab were incentivized to grow only wheat and rice. This was the first time after the independence when Punjab enjoyed explosive growth in the agriculture sector which both ended the food crises and increased the income of farmers.
But this was rather short-lived. Repetition of the same crops over and over again has deteriorated the soil quality, and the over-usage of fertilizers and pesticides also played a role in this gradual fall from grace. The state never had enough water resources to grow rice, yet it is grown by over-exploiting groundwater, lowering it from an ideal level of 50-60ft to an alarming 150-200ft which poses a risk of a future water crisis.
Agricultural innovation is little to non-existential and even with the state government's exclusive support to the primary sector, it hasn't been able to produce the desired outcome. Moreover, a decline in Punjab's agricultural growth rate has been observed, as compared to the average of the other Indian states. Take a look at the graph below.
Agriculture Growth Rate of Punjab (Graph)
This drop in the agricultural growth rate has translated to decreased profits and high agricultural debts.
Industrial Status
Due to "The Prioritization of Agriculture", both secondary and tertiary sectors were neglected. Youth, since the 80s, wanted to branch out into these sectors but there were little to no employment opportunities within the state. The elected governments were never willing to transition a historically agricultural state into a secondary or tertiary sector hub.
But as usual, politicians do what they do best, give excuses. Why Punjab couldn't evolve was blamed on issues like it being a border state, landlocked and less availability of resources. (I personally hate the last excuse, you don't need gold, silver, or iron for the tertiary sector, all you need is computers and corporate incentives.)
Now let's debunk a few of these excuses one by one.
Excuse 1: Wars
India has fought several wars with Pakistan across the Punjab border, and fears of fresh wars have kept industry away from Punjab. There was indeed a time, in the 1960s and 1970s when the central government sometimes seemed hesitant to build major public sector industrial projects in Punjab because of its location next to Pakistan. But the public sector has long ceased to be the driving force of industry in India, and economic reforms starting in the 1980s and accelerating in the 1990s have put the private sector in the driver’s seat. The private sector has invested massively in two other border states, Gujarat and Rajasthan, but much less in Punjab.
Excuse 2: History of Terrorism
Sikh terrorism caused Punjab’s decline. Sikh terrorism ended two decades ago, and Punjab’s decline has continued nevertheless. Today, many Indian states face Maoist insurrections, which sometimes are as threatening as Sikh militancy once was in Punjab. Yet this violence has not come in the way of India achieving its fastest growth in history. The most entrenched Maoist‐held areas are in the state of Chhattisgarh, which has huge forests, relatively few roads, and limited administrative breadth. The Maoists control very large areas in the state. Yet Chhattisgarh has been, in the last decade, one of India’s fastest growing states, averaging 9.1% per year between 2002-03 and 2010-11. It is a major producer of steel, sponge iron, and aluminum. No doubt it has the advantage of big mineral deposits, but Maoists have seriously disrupted this. The contrast between economic growth in Punjab and Chhattisgarh demonstrates that terrorism does not necessarily mean economic decline, and can co‐exist with double‐digit growth. Besides, almost two decades have passed since the end of terrorism in Punjab, so it is a poor excuse for the state’s continuing weak performance.
Punjab politicians say that the state accumulated huge debts because of low revenues and the high cost of combating terrorism in the terrorist era, and claim that New Delhi has not given enough debt relief to Punjab to get rid of this historical burden. This is disputed strongly by New Delhi. A former finance ministry official who dealt with Punjab’s debt problems says that debt relief for the terrorist era has been given in ample measure by the Twelfth and Thirteenth Finance Commission. The real problem, says the official, is that slow GDP growth has meant slow revenue growth, and its fiscal impact has been compounded by huge non‐productive subsidies, mainly for electricity.
Excuse 3: Unavailability of Ports
Punjab is very distant from the sea, and so is unable to grow as fast as states with ports. Geography is not destiny. Land‐locked areas may have disadvantages, but are capable of becoming rich and fast‐growing if they follow the right policies. Just as badly land‐locked as Punjab are the two neighboring hill‐states of Himachal Pradesh and Uttarakhand, both of which have grown much faster than Punjab. Until the 1980s, New Delhi followed a “freight equalization policy” that enabled all states to get industrial inputs like coal and steel at the same government‐ordained price. Once freight equalization was abandoned in the 1990s, Punjab’s distance from coal mines and steel plants became a disadvantage. However, many other states were just as disadvantaged in distance from coal mines and steel plants but fared well. The best example of this was Gujarat, which became India’s fastest‐growing major state even as Punjab kept slipping.
Excuse 4: Lack of Mineral Resources
Punjab has no metallic minerals or coal, and so loses out to states that do. Good agricultural soil is a form of mineral wealth, and this was the driver of all great ancient civilizations from Egypt to China. And Punjab has this sort of mineral wealth in abundance—its soils are excellent for agriculture and rank among the best in India. This is one reason why its agricultural yields are the highest among any state. Mineral wealth is by no means a key determinant of either industrialization or GDP. Maharashtra, Tamil Nadu, and Gujarat are India’s most industrialized states, with high GDPs. None of them has major minerals. Maharashtra has substantial coal reserves for power generation, but Gujarat and Tamil Nadu do not. Looking across the globe, we find that countries like Japan, Korea, and now China have shown it is possible to import minerals from across the world and yet produce internationally competitive industries and become miracle economies. Punjab itself was the fifth‐most industrialized state in India in the 1980s, despite the lack of nearby minerals or coal.
The bottom line is that no state government ever elected was bothered about bringing the industrial change. Interestingly, 'Economic Transformation of a Developing Economy: The Experience of Punjab, India', a research book by Lakhwinder Singh and Nirvkar Singh mentions the following on its 4th page:
Against the backdrop of Punjab's turmoil, it is now almost forgotten that a significant economic transformation agenda and program had been contemplated and laid down in an industrial policy resolution of the government of Punjab in 1978. This program was expected to be implemented during the 1980s but was completely sidelined by the disruption of democratically elected governments. Instead, the Punjab economy remained locked into an equilibrium that was dominated by an agricultural system that remained oriented towards fulfilling the needs of national food security.
To be fair, Punjab has industrial cities like Ludhiana (Textile) and Jalandhar (Sports) but they aren't even capable enough to compete at the national level now, let alone the international level. Let's observe the case of Jalandhar's sports industry.
Jalandhar used to have a monopoly on boxing gloves before the "Made in China" era. When China entered the market, it produced sports goods at roughly 25% fewer costs, ultimately capturing 90% of the market share, pushing Jalandhar out of the game.
Punjab also had industrial units producing parts for bicycles but due to the lack of subsidies, incentives for innovation, and effective corporate policies, the industry was engulfed by the Chinese players with efficient strategies.
As agriculture was burdened by the production of wheat and rice, major textile companies relocated due to a lack of cotton and other textile-related raw materials. This was again further catalyzed by government ignorance. These companies relocated to the states like Gujrat, Maharashtra, and even Haryana where electricity was subsidized for industries and land was available at a cheap price. This relocation was certainly bad news for Punjab's economy (about which we'll rant in detail in the next section). It can be explained easily with the following arrow diagram.
The Industrial situation of Punjab is such maybe because the politics is controlled by Jat Sikhs who are agriculturists and quite unmindful of industries. Out of the time spent on debates in state assemblies only 10% was devoted to non-agricultural issues since the 2000s. The industry is deprioritized by default because of the system established.
Economic Situation of Punjab
Punjab was the third richest state of India till 2002-03. But since the 2000s, the contribution of the state to the national economy started to decline. The graph below demonstrates this situation:
GDP Contribution of Punjab (Graph)
Punjab's per capita income has fallen to ₹1,15,882 in 2022, which is lower than the national average of ₹1,16,067. Moreover, the current per capita expenditure (a measure of the spending on goods and services purchased by, and on behalf of, households) is ₹869 per person which is astonishingly lower than the national average of ₹3,509.
Well, bad news ain't over yet. Take a look at the outstanding debt infographic below:
Outstanding Debt of Punjab
Even though the Debt to GDP ratio is low as compared to India's(2021: 89.6%) but if we compare it to the neighboring state of Haryana(2022: 24.2%), which was also an agricultural state a decade back, Punjab's ratio is roughly double. Also, the state's debt has been increasing quite rapidly.
Why Emigrate?
People from Punjab have been emigrating since the 1980s, but the reasons to emigrate now differ greatly from that period. Apart from the factual issues discussed in the previous sections, there are a few political and societal reasons too.
Punjab's elected government has become more of a two-party clash game. Even though a new political party(Aam Aadmi Party) formed the government in 2022 but few of its inexperienced members have proved to be a pain for the common people and administrative bodies. Moreover, the parties who previously used to form governments are trying their level best to destabilize the newly elected government.
Additionally, the people of the state are becoming quite impatient and indecisive about their political stance. The best example of this argument is Sangrur's MP election of 2022 where Simranjit Singh Mann won by a landslide (Click for details). Moreover, the unemployment rate is skyrocketing, and people are unable to find a job suiting their capabilities. Job Satisfaction levels are also low as compared to the national average, see the graph below.
Job Satisfaction (Infographic)
These political uncertainties induce fear about the future among the youth, motivating them to move out of Punjab or India altogether.
Also the identity of people in India, to a great extent, is commonly associated with their community and family. People are envious of their neighbors, cousins, uncles, you name it. People do tend to send their kids abroad as an act of status and pride. While some people go abroad because of such reasons others tend to move out with opposite motives, to avoid such an interconnected or invasive(depending on what you believe) society as they believe the west provides a more individual-focused society.
But people also move out in search of perspectives which they gain by experiencing a new culture. Globalization of our world has opened new doors for the youth which were previously unknown and young people being young people want to experiment and work out their ways.
For some emigrants, foreign land is a land of opportunities while for some it's their definition of independence. The reasons may vary for each individual but the conditions and situation of the homeland undoubtedly influence the choice. After all, for a mindful individual, leaving a place where you spent most of your innocent years is emotionally tough and requires strong reasons.
The Conclusion
Issues of a state are always complex and quite interlinked. To sum up, if we talk about reducing emigration from Punjab, we need to tackle the issues which are the cause. Punjab’s politicians need to abandon old excuses and myths about why it is in trouble and face up to some ugly realities. The state needs to tackle its chronic fiscal deficit, something that holds back investment in education, health, and infrastructure and focuses public spending on various unproductive subsidies, the most fiscally crippling of which is free power for farmers. It needs to end perverse incentives that encourage land speculation and push up land prices so high as to make industrial investment uneconomic. It needs to end chronic power shortages and rehabilitate the state’s deteriorating transmission system, and this cannot be done without charging farmers for power. Agricultural marketing is riddled with controls and needs to be freed from the grip of a trading class with huge political clout.
The positive news is that Punjab has managed to attract private investment in power, so electricity shortages should lessen in the coming years. It has also shifted from old public sector monopolies to public‐private partnerships in health, education, and infrastructure, and these promise to improve efficiency and outcomes as well as accelerate investment. Its Right to Service Act is a promising first step in improving administrative efficiency and justice for citizens. Punjab has recently allowed long‐term farm leases, and this could attract big investments and raise productivity in agriculture. It has a good business climate by Indian standards, and Ludhiana is ranked the most business‐friendly of the country’s top 17 cities. Now all Punjab needs is the establishment of a few planned market clusters, just like what Haryana did with its 2005's New Economic Policy. Moreover, the trade between India and Pakistan needs to get normalized after decades of bitter hostility and confrontation. Punjab will become the gateway of Indian trade with Pakistan, and that will give it's economy a big boost.
With these measures, Punjab might finally become an industrial hub and provide enough employment opportunities for the youth, reducing employment-related reasons for emigration. With money flowing in, politics in Punjab may also stabilize and provide the necessary inputs in the development of promising industrial and educational sectors.
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