Is Papanca (i.e., hindrance) always unwholesome?

With asekkhā sammāvimutti, or Right Freedom, there is no longer any need for a spiritual search. From DN33 we have:

Ten qualities of an adept: an adept’s right view, right thought, right speech, right action, right livelihood, right effort, right mindfulness, right immersion, right knowledge, and right freedom.

With the cessation (and therefore non-arising) of defilements, the work is done.

If you consider the spiritual search to be a hindrance, then the answer to your question is, "Yes."

Nyom Sarath,

isn't your question driven by papanca? If skilful intended or not, Nyom would know possible. For his gain in the world? To go beyond?

Papanca is actually very needed for the path. Without that one misses, like most modern practing people, the governing principles, having missed first things first.

Only at the end of the path, on very refined level, objectivication will be total abonded. Fist it is necessary to develop qualities which give one not much need to be much burdened if the 18 question arise and a healthy self-estimate.

More on papanca, a ver nice teaching: The Arrows of Thinking: Papañca & the path to end conflict.

So one should be careful of one might become when associating with fools at first place in regard of the training and the taught.

"Today" the training of the Niganthas, the thieves is broadly addopted by "buddhists":

"On the Uposatha day (gathering together), they get their disciple to undertake the following practice: 'Here, my good man. Having stripped off all your clothing, say this: "I am nothing by anything or of anything. Thus there is nothing by anything or of anything that is mine."' Yet in spite of that, his parents know of him that 'This is our child.' And he knows of them that 'These are my parents.' His wives & children know of him that 'This is our husband & father.' And he knows of them that 'These are my wives & children.' His workers & slaves know of him that 'This is our master.' And he knows of them that 'These are my workers & slaves.' Thus at a time when he should be persuaded to undertake truthfulness, he is persuaded to undertake falsehood. At the end of the night, he resumes the consumption of his belongings, even though they aren't given back to him. This counts as stealing, I tell you. Such is the Uposatha of the Jains, Visakha. When this Uposatha of the Jains is undertaken, it is not of great fruit or great benefit, not of great glory or great radiance.

Just look on internet how the "no selves" are not dear to steal...

It's possible good to count that with reaching the path raw kinds of objectification is abounded and merely "just a conventional way" of thinking and expressing, but still refering to ang object/being being the cause and effect of actions, on a refined level. At this point, having completed the virtue section of the path, the higher teaching can be applied effectively for beneficial result.

[Not given for trade, exchange, stacks]

Nibbāna itself is actually called, indirectly, the “unproliferated” in, say Aṅguttaranikāya 4.173 where it is called appapañcaṃ, or unproliferated, or unhypostatised, in the context of the phrase “appapañcaṃ papañceti”, or "proliferating that which is unproliferated."

If any papanca (objectification-classification or reification) results in thoughts which give rise to passion / lust / greed, aversion / hatred or delusion, then it's unwholesome.

If any papanca (objectification-classification or reification) results in thoughts which takes a person away from passion / lust / greed, aversion / hatred and delusion, then it's wholesome.

For e.g. if you feel compassion (karuna) or sympathetic joy (mudita) towards certain specific people based on their specific situation, that's considered wholesome.

However, ending papanca takes one to the end of suffering, which is beyond both wholesome and unwholesome.

Passion / greed, aversion and delusion are the roots of that which is not wholesome and not skillful according to AN 3.69 (and vice versa):

"Monks, there are these three roots of what is unskillful. Which three? Greed is a root of what is unskillful, aversion is a root of what is unskillful, delusion is a root of what is unskillful.

"A person like this — his mind overcome with evil, unskillful qualities born of greed... born of aversion... born of delusion, his mind consumed — dwells in suffering right in the here-&-now — feeling threatened, turbulent, feverish — and at the break-up of the body, after death, can expect a bad destination.

"Now, there are these three roots of what is skillful. Which three? Lack of greed is a root of what is skillful, lack of aversion is a root of what is skillful, lack of delusion is a root of what is skillful.

"In a person like this, evil, unskillful qualities born of greed... born of aversion... born of delusion have been abandoned, their root destroyed, made like a palmyra stump, deprived of the conditions of development, not destined for future arising. He dwells in ease right in the here-&-now — feeling unthreatened, placid, unfeverish — and is unbound right in the here-&-now.

MN 19 talks about two types of thinking - skillful / wholesome and non-skillful / unwholesome.

From DN 21, desires come from thoughts and thoughts come from papanca (objectification-classification or reification):

"Desire has thinking as its cause, has thinking as its origination, has thinking as what gives it birth, has thinking as its source. When thinking exists, desire comes into being. When thinking is not, it doesn't."

"Thinking has the perceptions & categories of objectification (papanca) as its cause, has the perceptions & categories of objectification as its origination, has the perceptions & categories of objectification as what gives it birth, has the perceptions & categories of objectification as its source. When the perceptions & categories of objectification exist, thinking comes into being. When the perceptions & categories of objectification are not, it doesn't."

"Papanca have their cause in perception" according to Sn 4.11 but perception cannot be prevented. Papanca can be stopped by putting an end to the thought "I am the thinker" according to Sn 4.14:

Seeing in what way is a monk unbound,
clinging to nothing in the world?"
"He should put an entire stop
to the root of objectification-classifications:
'I am the thinker.'
He should train, always mindful,
to subdue any craving inside him.

Papanca is reification or objectification-classification of perceived sensations relative to one's self. What is something and how is it related to me? Does it belong to me or someone else? Is it a threat to me or will it profit me?

The end of self-view will bring an end to reification (papanca). The end of reification will bring an end to the type of thinking that leads to desires. And desires lead to suffering.

Putting an end to self-view and reification is summarized in Ud 1.10:

"Then, Bāhiya, you should train yourself thus: In reference to the seen, there will be only the seen. In reference to the heard, only the heard. In reference to the sensed, only the sensed. In reference to the cognized, only the cognized. That is how you should train yourself. When for you there will be only the seen in reference to the seen, only the heard in reference to the heard, only the sensed in reference to the sensed, only the cognized in reference to the cognized, then, Bāhiya, there is no you in connection with that. When there is no you in connection with that, there is no you there. When there is no you there, you are neither here nor yonder nor between the two. This, just this, is the end of stress."