Economy of Punjab, India

According to the 2008 Global Hunger Index, Punjab has the lowest level of hunger in India. Less than one-fourth of children below the age of five are underweight, although Punjab "came off worse than countries like Gabon and Vietnam when measured on the index".[1]

Punjab has relatively good infrastructure. This includes road, rail, air and river transport links that are extensive throughout the region. Punjab has also one of the lowest poverty rate in India at 6.16% (1999-2000 figures), and has won the best state performance award,[2] based on statistical data compiled by the Indian Government. In 2012, the state was one of the highest receiver of overall remittances to India which stood at $66.13 billion (4547429450000.00 Indian Rupees), below Kerala, Tamil Nadu and Uttar Pradesh.[3]

Macro-economic trend

This is a chart of trend of gross state domestic product of Punjab at market prices estimated by Ministry of Statistics and Programme Implementation with figures in millions of Indian Rupees. The traditional long-term financial policy of the Union Government is to reward well-performing States.

Year Gross State Domestic Product
(Indian Rupee / Ten Million / Crores)
1980 50,250
1985 95,060
1990 188,830
1995 386,150
2000 660,100
2005 925,380 [4]
2011 2,213,320 [5]

The state's debt was estimated at 62 per cent of its GDP in 2005.[6]

Major industrial cities

Dera Bassi, Jalandhar, Amritsar, Ludhiana, Patiala, Bathinda, Batala, Khanna, Faridkot, Rajpura, Mohali, Mandi Gobindgarh, Ropar, Firozpur, sangrur, Malerkotla and Moga are major financial and industrialized cities. A big share of state's GDP comes from these cities.


Punjab (the five rivers region) is one of the most fertile regions on earth. The region is ideal for growing wheat crop. Rice, sugar cane, fruits and vegetables are also grown. Indian Punjab is called the "Granary of India" or "India's bread-basket." [7] Many records mistakenly mention that it produces 43% of India's wheat, but that is actually its contribution to the national pool. It produces 17% of India's wheat, and 11% of India's rice (2013 data). The total area of Punjab is just 1.4% of total area of India, but it produces roughly 12% of the cereals produced in the country.[8] The largest grown crop is wheat. Other important crops are rice, cotton, sugarcane, pearl millet, maize, barley and fruits. The principal crops of Punjab are barley, wheat, rice, maize and sugarcane. Among the fodder crops are bajra and jowar. In the category of fruits, it produces abundant stock of kinnow. The main sources of irrigation are canals and tube wells. The rabi or the spring harvest consists of wheat, gram, barley, potatoes and winter vegetables. The Kharif or the autumn harvest consists of rice, maize, sugarcane, cotton and pulses. Agriculture sector is the largest contributor to the gross state domestic product (GSDP) of Punjab. According to 2013-14 data, the contribution of agriculture and allied industries in GSDP at factor cost is 28.13%.


The state has essentially an agrarian economy with a lower industrial output as compared to other states of India. A prominent feature of the industrial scenario of the Punjab is its small sized industrial units. There are nearly 194,000 small scale industrial units in the state in addition to 586 large and medium units.Dera Bassi, Ludhiana is an important center for industry. In the 1980s there was a chance of a Hero Honda and Maruti Suzuki plant to be set up in Ludhiana but due to some circumstances of terrorism it was cancelled.

Important industries

The industrial units in the state are broadly divided into three-

Textile industry

The state produces nearly 70% of the best quality cotton in India. In spite of several advantages, there is one major disadvantage that the total spindlage capacity of the state is only 1.5% of the country.Dera Bassi, Ludhiana is known as manchester of India. Batala was once called as "Iron bird of Asia" as it produced the highest amount of C.I.Casting, Agricultural and mechanical machinery. Batala is still one of the leading cities in Northern India in manufacturing of C.I Casting and mechanical machinery. It's also an agricultural marketplace and industrial center. Cotton ginning, weaving, sugar refining, rice milling are some of other business taking place here.

The cotton mills are located at Abohar, Malout, Phagwara, Amritsar, Kharar, Mohali and Ludhiana. Malerkotla, Abohar, Malout and Bhatinda are important for cotton ginning and pressing and nearly 25.3 million (25,300,000) bales of cotton are pressed annually over here. About 97 million kilograms of yarn and 36.5 million metres of cloth were produced in the cotton textile mills of Punjab. But only 43% of the cotton yarns formed in Punjab is used within the states and the remaining is sold outside the state. Pesticides introduced in the Green Revolution[9] played an important part in the bustling cotton industry. The most common biopesticides in Punjab are Bacillus thuringiensis (Bt). With the introduction of Bt cotton, the total Punjab cotton area increased from 449,000 hectares in 2002 to 560,000 hectares in 2005. During this time frame, production of cotton has also increased: from 1.08 million bales (170 Kg each) to 2.2 million bales, making up about 11-12% of the country's total production of cotton.[10]

Overall textile production of Punjab is predictable at Rs.105000 Million, as well as Rs.32500 Million sell abroad of knitwear, shawls, made-ups (bed sheets, pillow cases, duvet covers, and curtains) and yarns. The direct and indirect employ of textile doings in the state of Punjab is predictable at 2 Million people. “Said Mr H.S.Cheema, Chairman, Punjab committee, Northern India Textile Mills Association (NITMA)”.

Sugar industry

The sugar mills in Punjab are located at Batala, Gurdaspur, Bhogpur, Phagwara, Nawanshahr, Zira, Morinda, Rakhra, Dhuri, Fazilka, Nakodar, Dasua, Budhewal, Budhladha, Mukerian, Tarn Taran, Ajnala, Faridkot, Jagraon, Amloh, Patran and Lauhka. Butter Sivian Near Baba Bakala One of the salient feature of the sugar industry is that out of the 22 mills, 15 are in the Co-operative sector and 7 are privately owned. Compared to the state of Uttar Pradesh and some other Indian states, the size of the sugar mills in Punjab is small. The Co-operative sugar mill at Morinda is the biggest in the state with a daily crushing capacity of 4,000 tonnes of sugarcane. Six of the cooperative sugar mills are inoperative while the remaining nine crush cane during the season which is about 150 days.

Dairy industry

The primary source of milk and other dairy products in the state is the buffalo. The state ranks at the top in the country in the availability of milk after Haryana and gujarat.

The milk plants are mainly located at Verka (Amristar district), Ludhiana, Mohali, Jalandhar, Patiala, Hoshiarpur, Gurdaspur, Ferozepur, Sangrur, Bhatinda, Faridkot, Nabha, Moga, Kot Kapura and Hamira. The plant at Moga is the biggest plant in the state with a processing capacity of nearly 435 thousand litres of milk. The first AMUL milk plant of Punjab state was opened in 2015 at Batala.


Total energy of the state is provided by the PSPCL own THermal Plants a) 1260MW GURU GOBIND SINGH SUPER THERMAL PLANT at Ropar, b) 440MW Guru Nanak Dev Thermal Plant at Bhatinda, c) 920MW Guru Hargobind Thermal Plant at Lehra Mohabbat and its own Hydro Power Plants i) 110MW Shanan Power house at Joginder Nagar,ii) 600MW Ranjit Sagar DAM at Shah Pur Kandi,iii) 91.35MW UBDC power houses, iV) 207MW Mukerian Hydel Project, v) 134MW Anand Pur Sahib Hydel Channel, vi) Mini and Micro Hydro Power Plants on Sirhind Canal and its ditributeries.IN addidion to that it gets its share from Yhdro Power Plants under the control of BBMB. a) 1325MW Bhakra Dam Left and Right Bank Power Houses b) 155MW Hydro Power Plants on Bhakra Main Line at Ganguwal and Kotla, c) 396MW Hydro Power Plant at Pong, d)990MW Power Plant at Dehar. A new Thermal plant is set up in Rajpura(Punjab) with 1400 megawatt of power capacity inaugurated on 8th Dec 2013. Another Thermal Plant in Bathinda with capacity of 1980 Megawatt power will come up soon.

The common pool projects are the Bhakra Nangal Complex, the Dehar Power Plant and the Pong Power Plant. Punjab shares about 51% of the Power generated from the Bhakra Nangal Complex. 48% from the Power generated at the Pong Project.[11]

Common pool projects

Thermal electricity

Business and infrastructure

Punjab has good infrastructure. Its road, rail, air and transport system is rated one of the best in the country with ranking of 210 points compared to the national average of 100 in NCAER's infrastructure index. It has highest per capita generation of electricity in India, which is 2.5 times the national average. All major cities in Punjab benefit from this and have some of the highest tariff's in India. All of Punjab's villages have been electrified and connected to the state electrical power grid since 1974.

Source: NCAER & Punjab Government[12] In adddtionto it the State has nearly *100 percent electrification and nearly 100 percent potable water fecility to the population of the State.

Data bank

Economic and Statistical Organisation Punjab (ESO), is the nodal statistical agency of State Government of Punjab. It act as data bank and provides statistics to various stakeholders on various socio economic issues of the State.


About 1% of the S&P CNX 500 conglomerates have corporate offices in Punjab. This is a list of NSE-indexed conglomerates with corporate offices in Punjab. Figures are given in millions of Indian rupees for 2005.

See also


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