With the 2027 Punjab Assembly election approaching, the Aam Aadmi Party (AAP) government led by Chief Minister Bhagwant Mann is facing pressure on multiple fronts, including demands from government employees and farmers, as well as questions over the state's fiscal position. The Punjab Assembly's current term is due to expire in March 2027, putting the government in the final stretch before the next election. The Election Commission of India has indicated March 16, 2027, as the date on which the current Assembly's term expires. The opposition Congress, Bharatiya Janata Party (BJP) and Shiromani Akali Dal (SAD) are seeking to use the various issues confronting the government in their political attacks on AAP.

Employee and farmer protests have emerged as two significant sources of pressure. Punjab government employees and pensioners have been pressing for payment of pending dearness allowance (DA) arrears, restoration of the old pension scheme and other service-related demands. Employee unions have recently intensified their protests, including demonstrations outside the residences of ministers. The Indian Express reported that unions are seeking clearance of around Rs 14,200 crore in DA and related arrears, while the state government has maintained that it has to balance these liabilities against other essential expenditure. The dispute comes despite an improvement in the state's tax collections, with employees arguing that higher revenues provide greater scope for settling their outstanding dues.

Farmers, meanwhile, have been protesting over electricity supply and fertiliser availability, particularly as the paddy season progresses. Farmer organisations have also raised wider demands concerning government procurement at minimum support prices for crops including basmati, maize, moong, mustard and potatoes. Other demands include relief from farm and agricultural labourers' debt, compensation and government jobs for families of farmers and labourers who died by suicide, and long-term measures relating to floods, groundwater depletion and pollution. Recent protests over erratic electricity supply have included road blockades in parts of Punjab, with farmers demanding uninterrupted power for irrigation.

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The financial constraints add another layer to the government's challenge. According to an analysis of Punjab's 2026-27 Budget by PRS Legislative Research, the state has projected a revenue deficit of Rs 21,955 crore, equivalent to 2.2% of its Gross State Domestic Product, while the fiscal deficit is estimated at Rs 39,971 crore, or 4.1% of GSDP. Outstanding liabilities are projected at 45.1% of GSDP by the end of 2026-27. The budget also provides for Rs 15,550 crore in power subsidies and Rs 9,300 crore for the Mukh Mantri Mawan Dhian Satikar Yojana, a monthly assistance scheme for women. These figures illustrate the competing demands on the state's finances as the government considers employee and farmer demands alongside existing commitments.

The government is also dealing with political and religious controversies involving Mann. In June, the Akal Takht declared the chief minister “Guru Dokhi” and “Khalsa Panth Virodhi” following a controversy surrounding a video and the state government's legislation concerning the sanctity of the Guru Granth Sahib. Mann rejected the allegations and said attempts were being made to defame him. Separately, allegations involving Mann's wife, Dr Gurpreet Kaur, and an alleged demand for Rs 5 crore to settle a rape case have triggered demands from BJP and SAD leaders for an investigation. The allegations have been denied, and the controversy has involved competing claims from the political parties.

The combination of fiscal pressures, employee and farmer agitations and controversies surrounding the chief minister has given opposition parties several issues to raise ahead of the election. At the same time, the state government has begun engaging more directly with protesting employees and farmers, with AAP ministers and legislators holding discussions with demonstrators in recent days. The immediate challenge for the government is to address demands from different sections while managing its existing fiscal commitments. With the Assembly's term scheduled to end in March 2027, the coming months are likely to see greater political focus on governance, public finances, agricultural concerns and the government's handling of pending employee demands.

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