Surrounded by lush paddy fields, mango orchards and sheesham plantations, Dinanagar is a small town in Punjab's Gurdaspur district. Early Monday morning, when three gunmen dressed in army fatigues walked into its police station, opened fire, and took charge of an adjoining building, commentators immediately turned to asking whether the attackers could be local Khalistan revivalists.

Soon it became clear that the gunmen had entered Gurdaspur crossing the India-Pakistan border 15 km from Dinanagar. Punjab Chief Minister Parkash Singh Badal was quick to point to the accountability of the central intelligence and security forces for this breach.

But while Badal can shrug off blame for the attack on the Centre, he would find it harder to account for the deepening disquiet in the state.

Punjab witnessed a decade and half of militancy from 1981 till 1994, in which tens of thousands youth are said to have been killed or gone missing. Since then, the state has been peaceful but residents say it has failed to reap the gains of peace.

Those who witnessed the tumult of the 1980s describe the years after militancy ended in 1993 as years of abysmal governance, with deterioration in education facilities, few new jobs, and a large proportion of youth drifting to life-threatening drug addiction. In recent years, agriculture has stagnated, basic public services have been replaced, allegedly in many cases, by companies run by the ruling Badal family's associates and the state's finances are in a mess.

They say that this routine mismanagement of public services was visible even during the recent attack on Dinanagar police station.

Among the four policemen killed by militants was a Superintendent of Police and three home guards. Rival political leaders have questioned why there were only three policemen inside the border police station when the gunmen attacked, while the adjoining police barrack was occupied by seven home guards who are employed on contract to supplement the police force.

“Punjab has over 70,000 policemen, yet at the time of the attack, there were hardly any policemen in the thana, instead there were only home guards,” said Wassan Singh Zaffarwal, general secretary of the newly-formed United Akali Dal, in Batala in Gurdaspur. He added that this was because policemen, in excess of the sanctioned strength, were deployed as security guards for current, former MLAs, their spouses, their children.

The ruling Shrimonani Akali Dal and the Badal family stand accused of monopolising the state's finances.

Political activists allege that in the garb of raising revenue for the state, the Badal government has started auctioning prime land on which public hospitals, courts, government's circuit house stand at present to private builders. “The government took away hundreds of acres of lawns of the Vidya Sagar Institute of Mental Health, Amritsar, meant for use by patients for morning walk and exercises. Now there's a massive shopping mall on it,” said Rajiv Randhawa, a political activist living in Amritsar. “Why would a government hand over prime land in the center of the city like this?”

He cited how a tuberculosis hospital building in Sangrur and a local court building in Ludhiana had similarly been handed to private parties by first assigning them to be run on public private partnership mode and then transferring them to private companies.

While the Badals' businesses have grown, Punjab's finances have worsened. The state's debt has gone up from Rs 61,000 crore in 2008 to Rs 1.2 lakh crore this year, one of the highest among all states.

Drugs and mafia

At first appearance, the Punjab countryside betrays no signs of a bankrupt state.

Most of the villages in the district of Gurdaspur, where Dinanagar is located, are well connected to cities by roads and have multi-storied rural houses that speak of prosperity. But there is a crisis among most households. These districts along Punjab's border with Pakistan – Gurdaspur, Amritsar, Tarn Taran – which witnessed the worst violence during the militancy years are now the worst affected by drug trade.

Dhun is a large village in Tarn Taran district, south of Gurdaspur. In the last three months, the village has witnessed three deaths due to drug overdose while injecting heroin. “All three who died were boys between 16 and 24 years of age. There are at least 50 more in our village who are addicted to heroin and smack,” said former sarpanch Sarwan Singh Dhun. “The Chief Minister's response is to say Punjab is being vilified. Instead he should acknowledge the scale of the problem, and that it is destroying our youth.”

The village which like most other villages in the areas grows monolcultures of jhona or rice and wheat has seen farm yields drop over the years. The biggest benefit the government offers to farmers is free electricity. “The supply is irregular, it has become like Uttar Pradesh here now, with power cuts of 16 hours every day. With falling rice exports, farmers' income has dropped,” said Dhun.

For years, the Badal government blamed a rising drug addiction among Punjab's youth on international drug cartels active along an axis running from Afghanistan and Pakistan to opium-growing areas in Rajasthan and Madhya Pradesh. But when Jagdish Singh Bhola, a former DSP-turned-druglord was arrested last year, in a major embarrassment for the government, he named revenue minister Bikram Singh Majithia as the kingpin. Majithia is the brother-in-law of the deputy chief minister Sukhbir Badal and brother of union minister Harsimrat Kaur.

Dhun, who was the sarpanch here till 2005, had served as personal assistant to Bikram Singh Majithia from 2003 till 2010. He contested and lost the last state elections on the rival Punjab People's Party's ticket in 2012. “The Badals are doing business, not politics. Sand, cable TV, transport, liqour, and now even drugs – they have their hands in all. This is what is destroying Punjab. Leader vyaapaari, teh public bhikaari [Leaders are traders and public beggars]"

A lost generation

A 100-bed center for rehabilitation for recovering drug addicts is among the newest government buildings in Amritsar next to a model 50-bed deaddiction center set up here in 2011. While over 80 deaddiction centres exist in the state, there are very few rehabilitation centres.

“Punjab's farmers in Malwa region had afeem (opium) since centuries," said Dr PD Garg, the head of the deaddiction centre. "Big farmers got intensive farm work done by giving this to labourers as well. But now with the switch to opioids, synthtetic drugs resembling opium, the addiction has become more damaging."

While a majority of patients at the centre were male, including students and professionals, the centre's staff said a number of women between the ages of 19 and 36 years were undergoing treatment. These included a 32-year-old housewife from Gurdaspur who started consuming heroin since last year, a 29-year old beautician in Amritsar being treated for addiction to heroin and painkillers, an 18 year old factory worker who said she had got into a habit of consuming upto 20 bhaang tablets every day and several others.

The experience of 29-year-old Gautam Sharma (name changed), who works as a medical representative for a pharmaceutical company and got treated at the centre in January was no different. “I used to commute from Ludhiana to Amritsar every day for work and used to get very stressed at work," he said.  "A friend got me started on painkillers and in a month, I was consuming 15 a day. It took me eight months to quit.Tika lagaanaa [injecting heroin] has become a group recreation activity here,” he added.

Amandeep Bal, who teaches history at the Guru Nanak Dev University, Amritsar, said that during the militancy years, leaders emphasised avoiding alcohol, but the years following the militancy saw a spike in alcoholism, followed by drugs 15 years back. “We lost one generation to militancy, now we have lost a second to drugs,” said Bal.

No constituency for militancy

Despite the deepening crisis in Punjab, most people emphasised that fears of a possible revival of extremism are unfounded. There is no constituency for militancy in the state, they said.

Zaffarwal, a former militant, was the chief of the Khalistan Commando Force and was part of the five-member body which gave a call in 1986 for an armed struggle against the Indian state to create Khalistan. The United Akali Dal, the latest Akali party, plans to contest elections scheduled in 2017 on the demand for creating an autonomous region in Punjab within India. Zaffarwal says the demand for Khalistan no longer finds resonance in Punjab. The party will contest elections raising issues of deteriorating security, law and order and agriculture.

Paramjit Singh of the United Akali Dal expressed surprise that commentators had at first connected the Gurdaspur attacks to Khalistani elements. “In the last general elections, Simranjit Singh Mann, the most vocal supporter of Khalistan even lost the Khadoor seat and got only 18,000 votes. In 1989, at the peak of militancy Mann had won by a margin of over 5 lakh votes," said Singh. "Where is the support for Khalistan?”