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Punjab's growth engines sputter

November 09, 2015 18:03 IST

The Punjab government blames the slow growth on tax concessions in neighboring Himachal Pradesh and Haryana's proximity to Delhi.

Punjab's agriculture and industry are stagnating. The 5.32 per cent rate of growth (advance estimates) of the gross state domestic product in 2014-15 was lower than the 7.2 per cent pace of growth of the national gross domestic product.

Manufacturing growth slid precipitously from 24.32 per cent in 2006-07 to 2.26 per cent in 2014-15. And farm output in the state that ushered in India's green revolution declined 2.36 per cent in 2014-15.

Punjab's agriculture is caught in a cycle of sagging soil fertility, lack of techniques to save crops in inclement weather and diversion of land for purposes other than agriculture.

The marginal acceleration of the state's services sector from 8.69 per cent growth in 2006-07 to 9.58 per cent in 2014-15 does not compensate for the losses in agriculture and industry.

The Economic and Statistical Organisation of Punjab aggregates the annual average growth (advance estimates) of Punjab at 5.35 per cent in 2014-15, which is a huge drop from 10.18 per cent in 2006-07.

The Punjab government blames the slow growth on tax concessions in neighboring Himachal Pradesh and Haryana's proximity to Delhi.

But it has no reasons for the drastic fall in farm growth or rising farmers' debt, which has turned Punjab into the suicide capital of the north. 

According to the Punjab Farmers' Commission, a body appointed by the state government, 2,000 farmers in the state commit suicide every year despite it contributing the most to the food security of the nation.

Punjab procures about a third of the wheat and rice for the central pool, which amounts to an annual average 14 million tonnes of wheat and 13 million tonnes of paddy for the public distribution system.

Punjab's growth engines sputter The Statistical Abstracts of Punjab list 17,167 registered working factories with 59,2927 workers in 2009 and 17,825 factories with 64,6033 workers in 2013.

The addition of 658 factories in five years incorporates the conversion of non-registered factories, especially hosiery units in Ludhiana. The actual number of new factories in the state is likely to be lower.

Per capita investment in the state was Rs 41,003 in 2008-09 and rose to Rs 49,529 in 2013-14. In Haryana, by contrast, per capita investment increased from Rs 49,780 in 2008-09 to Rs 67,260 in 2013-14.

Punjab's Industries Minister Madan Mohan Mittal admits 193 industrial units shut down in the state between April 2007 and July 2015 and 168 of these were in Mandi Gobindgarh, a steel producing city.

Textile units, particularly spinning mills, are also on the verge of closure due to the high value-added tax and power tariffs. In the last three months Jindal Cotex, Oswal Ginning and Weaving Mills and KSM Industries have shut their Punjab operations.

More plan to follow. Other textile plants are now shut once a week and the break affects the efficiency of the spinning machines. 

The high cost of electricity at about Rs 8 per unit is the main cause of the industrial slump.

Incentives offered by Gujarat and Madhya Pradesh have affected Punjab because these states are closer to ports and have cheaper land and labour.

The state's textile giants like the Vardhman Group, SEL Manufacturing and Trident have scaled down operations in Punjab while expanding in Madhya Pradesh.

Fresh investments by ITC, Cargill, Infosys, and Mahindra & Mahindra have made some inroads, but the state needs much more to make up for the losses of the past seven years.

Komal Amit Gera in Chandigarh
Source: source