Manpreet will take on Chief Minister Parkash Singh Badal's daughter-in-law and sitting MP Harsimrat Kaur from Bathinda constituency.
Congress will contest the remaining 12 Lok Sabha seats, with polling in Punjab's 13 seats scheduled for April 30.
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Manpreet is estranged nephew of Chief Minister Parkash Singh Badal and former finance minister in the SAD-BJP government.
The newly-formed alliance leaves a window open for the Communist Party of India to be its part.
However, according to Bajwa and Manpreet, the CPI's central leadership had left it to state unit to take a final call. In the event CPI comes on board, the Left party may contest from Faridkot seat.
CPI's senior leader Joginder Dayal told PTI that his party is holding a meeting at Chandigarh tomorrow where a decision on the issue will be taken.
Bajwa asserted that Congress-PPP tie-up was here to last and it was not a stop-gap arrangement.
Manpreet Badal had floated the PPP three years back after severing ties with SAD and had unsuccessfully contested the 2012 Punjab assembly elections.
Bajwa said the PPP cadre would support the Congress on the seats the party is contesting.
Manpreet quoted a few lines of famous Urdu poet Muneer Niazi to stress that his joining hands with Congress may have come late in the day, but the pact was going to last long.
"It is rule of the mafia in Punjab. I am happy to join hands with a national, secular party to fight this mafia and corrupt forces in the state," Manpreet said.
Bajwa said inspite of the fact that SAD-BJP got nearly 40 per cent vote share in the last Assembly polls in the state, they managed to form the government.
"It is important for all secular forces to join hands so that fundamentalist and communal forces can be defeated," he said.
Bajwa also said the Congress-PPP tie-up had the blessings of senior Congress leaders including Sonia Gandhi, Rahul Gandhi and Shakeel Ahmed.
"We will also come out with Punjab specific manifesto of our two parties. A joint campaign committee will also be formed and we will begin from Bathinda to expose the corrupt and anti-people SAD-BJP government," Bajwa said.
Senior Punjab Congress leader Sunil Jakhar said that SAD-BJP regime was "power drunk".
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