Punjab govt launched a policy to curb stubble burning by linking farmers with industry through subsidies.
CHANDIGARH: In a pioneering initiative aimed at resolving one of North India’s most pressing environmental challenges, the Punjab Government has unveiled a first-of-its-kind subsidy policy that encourages both farmers and industries to consume paddy straw—one of the main contributors to stubble burning—responsibly. This development comes amid growing criticism of Punjab’s alleged role in Delhi’s recurring air pollution crisis.
The state has amended its Industrial and Business Development Policy 2022 to include capital subsidies for industries that adopt paddy straw-based boilers, while continuing to incentivise farmers with machinery and financial support to manage crop residue sustainably. By aligning the interests of agriculture and industry, Punjab aims to end a longstanding environmental issue that has repeatedly drawn national scrutiny.
Launching the scheme at Punjab Bhawan, Industry Minister Tarunpreet Singh Sond emphasised that this is the first time a policy simultaneously addresses both the root cause—stubble burning by farmers—and its long-term solution—industrial recycling of paddy straw. Approved in a Cabinet meeting on February 13 and notified on February 20, the scheme’s operational guidelines were published on April 23, 2025.
Under the new policy, industrial units installing paddy straw-based boilers will be eligible for a capital subsidy of Rs 1 crore per 8 TPH (tonnes per hour) boiler, or 33% of the actual cost—whichever is lower—up to a maximum of Rs 5 crore per unit. Industries converting their existing systems to run on paddy straw will receive Rs 50 lakh per 8 TPH boiler or 33% of the cost, capped at Rs 2.5 crore per unit. Units with larger capacities will receive proportionate assistance.
The government has allocated Rs 60 crore for the programme, expected to benefit 500–600 industrial units across Punjab, especially in boiler-intensive clusters like Ludhiana.
The announcement comes at a time when stubble burning in Punjab continues to dominate national discourse on air pollution. Every year, between October and November, satellite imagery and real-time air quality data show a sharp increase in farm fires across Punjab and Haryana. These fires significantly contribute to Delhi’s toxic smog, pushing the Air Quality Index (AQI) into the “Severe” category—often exceeding 400 on the 500-point scale.
In November 2023 and 2024, Delhi’s AQI routinely ranged between 450 and 490 during peak stubble-burning weeks, forcing school closures, construction bans, and emergency health warnings. The national capital’s residents have repeatedly blamed Punjab, demanding urgent and enforceable solutions.
While acknowledging the problem, Punjab officials have long argued that the state does not receive adequate financial support from the Centre to offer large-scale incentives to farmers.
“Complaining against Punjab while denying us the means to develop viable alternatives is both unfair and unsustainable,” said a senior bureaucrat earlier this year.
Sond noted that the new industrial subsidy scheme is part of a broader effort to transform paddy straw from a burden into a resource.
“Farmers burned stubble for years because they had no buyers. Now, industries will pay for it, and the government will facilitate this transition. It’s a win-win,” he said. In addition to capital subsidies, the policy offers a 100% exemption on stamp duty for land used for paddy straw handling and storage, and a 100% net State GST refund for seven years, capped at 75% of the total investment.
To qualify, industrial units must have obtained a “Consent to Establish” certificate from the Punjab Pollution Control Board on or after February 20, 2025. The scheme applies only to operational units and will be implemented on a first-come, first-served basis. Subsidy-supported boilers must run on paddy straw for at least five years, failing which the subsidy will be recovered.
Experts have welcomed the initiative as a much-needed strategic shift. “This is the first time Punjab is offering a structural, financially backed alternative to stubble burning, rather than relying on punitive measures or short-term interventions,” said an environmental policy analyst based in Chandigarh.
“If successful, this model could be replicated by other agrarian states facing similar issues.”
As the paddy harvesting season approaches once again, attention will focus on whether this twin-incentive approach can finally break Punjab’s annual cycle of fires and finger-pointing. So far, the Mann government appears determined to replace combustion with convergence—turning an environmental liability into an economic opportunity.