India surpassed Japan as the world's fourth-largest economy, outpacing Japan's $4.18 trillion GDP with a nominal GDP of about $4.19 trillion. Learn how Punjab has played its role in the economic development of India as the nation celebrates the feat. The economic size and share of Punjab The economy of Punjab stands at 16th place among Indian states with a Gross State Domestic Product (GSDP) of about ₹8.91 lakh crore (about $98 billion) in 2025–2026. The CEIC data report also estimates that Punjab will account for 2.445% of India's GDP in 2025, down from the high of more than 3% in 2005.
While this places Punjab below some of the states with comparatively higher growth rates, its well-balanced output is tremendously important in a national economic context.
Sector-wise contributions
Punjab's economy has always remained agriculture-based but is currently transforming towards manufacturing and services. The PRS Legislative Study on Documenting Punjab's Budget 2025–2026 generated interest in pre-budget economic analysis of Punjab's sector-wise contributions from manufacturing, services, and agriculture.
Agriculture: The economy of Punjab is still based 26% on agriculture. Punjab remains the largest rice and wheat producer in India, ensuring food security for India.
Manufacturing: The sector's core strengths are light engineering, textile industries, and agro-processing. It contributes 28% to Punjab's GDP and has expanded at a growth rate of over 6.8% in the past five years.
Services sector: The dominant sector currently, services encompass administration, financial services, education, and health and represent 47% of Punjab's GSDP. Services increased by 7.3% above agriculture during 2023–2024.
Growth trends and challenges.
Although the overall GDP of India increased 8.2% during 2023–2024, Punjab's GSDP increased 6.2% and is projected to fall to 6.0% in 2024–2025, as per the Economic Survey. Punjab's established agri-based roots, strong industrial base, and nascent service sector all contribute towards India moving up to the fourth-largest economy globally. Punjab, however, needs to correct structural imperfections, foster innovation, and diversify its economic base to be able to serve the country's economy more and be in sync with India's growth trajectory.