Punjab’s economic malaise is not cultural, nor is it inevitable. The real problem lies in a system that makes it unnecessarily hard for businesses to grow, create good jobs, and pay competitive wages. The state has the talent, the resources, and the entrepreneurial spirit — but these are being stifled by outdated laws, excessive compliance, and cumbersome processes. If Punjab wants to stem migration and build a high-wage economy, it must act now with bold reforms: decriminalisation, deregulation, and digitisation of employer compliance.
Jobs Exist, But Pay Doesn’t Match Potential
Punjab doesn’t just need more jobs — it needs better jobs. Low wages keep many employed workers in poverty. This stems from the lack of large, formal, high-productivity employers. Across India’s 63 million enterprises, only 29,500 have a paid-up capital of more than ₹10 crore.
The biggest barrier? A mountain of compliance obligations that choke growth before it begins. Nationwide, employers face 69,233 compliance requirements, 6,618 filings, and 26,134 provisions that carry potential jail time. In Punjab alone, the picture is equally daunting: 827 Acts (150 specific to the state), 29,758 compliance requirements (4,221 from state laws), 2,410 filings (128 from state laws), and 7,153 jail provisions (1,914 from state laws). This complexity discourages risk-taking, fuels corruption, and traps businesses in the informal sector.
An Economy Stuck in Low Gear
With a Gross State Domestic Product of ₹8.9 lakh crore, Punjab hosts over 12.8 lakh micro, small, and medium enterprises, more than 4.06 lakh GST-paying businesses, and 26,952 registered companies. Yet only 1.1% of these entities make monthly Provident Fund contributions — a clear sign of low formalisation.
Sectors like manufacturing, exports, and services remain underdeveloped, urbanisation is slow, and women’s labour force participation is minimal. The problem is not a shortage of land, labour, or capital. It’s the inability to combine them productively — a challenge rooted in governance, not capacity.
Clear the Criminal Clutter
The state must review all business-related laws and remove criminal penalties for procedural lapses, first-time offences, or non-harmful violations. Criminal law should be reserved for cases involving deliberate fraud or serious harm.
This shift would not be “soft on crime” — it would simply focus enforcement where it matters, reducing fear and uncertainty for honest businesses while freeing the system from thousands of low-value cases. If Punjab applied clear review principles, it could eliminate up to 90% of current criminal provisions related to employers.
Go Digital, Go Transparent
Punjab’s compliance system remains paper-heavy, fragmented, and dependent on intermediaries. A single, state-wide digital compliance platform — modelled on national digital public goods — could be a game-changer.
Such a system would integrate all time-bound, event-driven, ongoing, and licence-based requirements into one portal. Departments would publish licences, permissions, NOCs, and regulatory updates directly to the platform, creating a secure, tamper-proof record. Businesses could file documents, make payments, and receive approvals online, with all actions trackable in real time. This would slash costs, reduce delays, and close the door on routine harassment.
Cut the Red Tape for Good
A dedicated regulatory reform body should systematically review every rule and requirement. Outdated and duplicate obligations should be scrapped, overly complex ones simplified, and only essential safeguards retained. This process must be principles-based: every regulation should justify its existence in terms of relevance, effectiveness, and economic value and those which fail to adhere to these principles should be removed or modified.
The Clock is Ticking
Punjab’s debt levels are already high and set to rise further. At the same time, its young people are leaving in large numbers to seek opportunities abroad. The state’s agricultural base, while strong, cannot sustain long-term growth alone.
The surest way to restore Punjab’s economic health is to attract and retain large, formal employers who can pay high wages, invest in skills, and expand the tax base. That requires a business environment where growth is encouraged, not punished.
Punjab’s fertile fields made it a leader in agriculture. With the right reforms, it can also become fertile ground for enterprise. The window for action is open — but it will not stay open forever.
This article is based on an article published in the Tribune on 14th August: ‘High-wage jobs can rev up Punjab’ authored by Manish Sabharwal and Jayashri Patil
