Punjab, India's agrarian heartland, faces a critical environmental challenge due to post-harvest stubble burning of paddy crops. This practice, while convenient for field clearance, releases substantial greenhouse gases (CO₂, CO, CH₄) and hazardous particulate matter (PM2.5/PM10), severely degrading air quality across northern India and contributing to Delhi's annual smog crisis. Our study reveals a 48.5% reduction in burning incidents (71,159 in 2021 to 36,663 in 2023), demonstrating progress through policy interventions, though persistent hotspots like Sangrur district remain. The research highlights the multidimensional impacts of stubble burning: soil nutrient depletion (90% nitrogen loss), reduced microbial activity, and serious public health consequences including respiratory illnesses. We evaluate sustainable alternatives including in-situ solutions (Happy Seeder technology, PUSA decomposer) and ex-situ utilization (bioenergy production, industrial applications). Government initiatives have successfully managed 15.86 million tons of residue (2023), with strategies scaling to 19.52 million tons (2024 projection). Key challenges include high machinery costs for smallholders and underdeveloped residue supply chains. The paper concludes with policy recommendations emphasizing subsidized technology access, farmer awareness programs, and strengthened market linkages to transform agricultural waste into economic resources while achieving environmental and climate objectives. This transition promises triple benefits: cleaner air, enhanced soil productivity, and improved farmer livelihoods, making it crucial for sustainable agriculture in India's breadbasket.