Like drug use, most indicators show a state in decline
Once the granary of India and home to some of India’s top entrepreneurs—Hero’s BM Munjal and Bharti Airtel’s Sunil Mittal come to mind immediately—Punjab is today a pale shadow of itself. If Udta Punjab—cleared by the Bombay High Court after one cut—shows the state’s decline into drug addiction, other indicators pretty much confirm this proud state’s steady decline. Even its agriculture, once the pride of India, hasn’t moved much beyond wheat and rice, and with the days of the huge jump in yields over, the days of large agriculture growth are over—indeed, even this wheat and rice would be a lot less viable if proper charges were levied for both water and electricity usage. With not enough adoption of value added crops like fruits and vegetables or large-scale dairying, the state’s share of even India’s agriculture GDP is down from 6.6% to 5.6% in just the last decade; the state’s agriculture growth has crossed 2% just thrice between FY06 and FY15. The state’s share of manufacturing in India has gone up marginally from 3.2% in FY06 to 3.8% in FY14, but this was a level reached in FY08. As a result, Punjab’s share of India’s GDP has been steadily declining, from 4.3% in 1985-86, all the way down to 2.96% in FY15. Not surprisingly, with incomes not rising as fast, the state’s fiscal balances have gone for a toss. Punjab’s debt-to-GSDP was 32.4% in FY15 as compared to 22.3% for the country as a whole. Its annual debt servicing bill alone is around three-fourth of its VAT revenue estimate for FY17.
Much of Punjab’s problem stems from the state’s political class showing no serious intent to get its economy out of the rut it was in, and by persisting with the wheat-rice-MSP-FCI vicious cycle, the central government played a big role in not allowing market forces to help steer the Punjab farmer towards more value added agriculture including food processing. While the need was to encourage industrial growth by easing doing-business rules—Punjab is ranked 15th in the country—and making land/power available at reasonable rates for industry, per capita investment in the state crawled from R41,003 in FY09 to R49,529 in FY14 while in neighbouring Haryana, it went up from Rs 49,780 to Rs 67,260. And if the centre was to blame for spoiling the soil through overuse of excessively subsidised fertiliser, the state’s free water and heavily subsidised electricity for pumping water ensured it not only grew the wrong crop but also that large tracts of land became useless due to salinity induced by flooding of the land. Less than a year from the elections, the best the SAD-BJP have to offer voters are denotification of land acquired for the SYL canal—to ensure water didn’t go from Punjab to Haryana—and get the Centre to pass an Act banning Sehajdhari Sikhs from voting in SGPC elections. The next elections will be fought on as much Udta Punjab as they will on Doobta Punjab—both, in any case, are two sides of the same coin.