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Millennium Post

Punjab economy in shambles

Can the rot that has pushed Punjab’s economy to its terminal stage be stemmed? The question has gained importance because of the latest revelations about the growth rates. According to states 2011-12 growth data submitted by the Union ministry of statistics to the Planning Commission last week, Punjab with 5.8 per cent growth in the outgoing year was the country’s second slowest growing state after UP. Its growth was lower than its own 2010-2011 growth of seven per cent and India’s 6.5 per cent. Punjab’s per capita income which was already lowest in the country also fell in the last fiscal.

Who is responsible for the dismal state of Punjab’s economy, which was once the country’s most prosperous state? No doubt, 1980s terrorism has largely contributed to the present sorry state of economy. This, however, does not absolve the successive Congress and the Akali-BJP governments – more so the latter – of the charge of ruining the state’s economy by pursuing populist policies without mobilising matching resources.   

Chief Minister Parkash Singh Badal has now opted for the easy way of stepping up pressure on the centre to come to Punjab’s rescue by also lending it political angle. Repeating his charge of discrimination against Punjab, he said that the federal structure of the country as enshrined in the Constitution was being eroded because of the centre’s attitude.  

Federalism stipulates a quid pro quo relationship between the centre and the states. The centre must decentralise powers giving autonomy to the states to the maximum permissible under the Constitution. But it is also imperative for the states to positively respond by cooperating with the centre on national issues. The centre-state relations are a two-way traffic and not perennial sabre-rattling by one side as the Akali leadership is doing. If it wants the centre to come to its government’s rescue, it also has to ensure its cooperation on important issues facing the country without consideration to its partisan interests.

Finance Minister Pranab Mukherjee has already indicated that he was considering a plan for bailing out Punjab from the acute financial crisis it has been facing. The first test of the Akali Dal observing the spirit of federalism will be the forthcoming election of the President of India. Will it back the candidate if the centre manages a consensus among majority of the political parties on a particular candidate? Or, will its leadership oppose the consensus candidate and, on partisan considerations, toe its ally BJP’s line if it decides to sponsor or support a rival candidate?

The alliance government seems to be pursuing the strategy of depending on the centre for overcoming the state’s financial woes without making efforts to generate resources within the state. But it tends to weaken the state’s case for help because of its non-utilising and mis-utilising central funds and diverting large amounts for non-specified purposes (mostly populist steps) during the past five years. Punjab’s finance minister Parminder Singh Dhindsa has admitted that Rs 2,000 crore of the central grants was diverted to non-specified schemes during the last five years.             

While the ruling leadership is pressurising the centre for higher financial assistance for the state’s development, the alliance government’s own five years record has been much below the promised performance. For instance, soon after the Akali-BJP government took over in 2007, Sukhbir Singh Badal had declared a three-year deadline for making Punjab a power surplus state. Even after the lapse of over five years, the fulfillment of the commitment is no where in sight.

Sukhbir Singh seems to be in love with three-year deadlines. After assuming power for the second consecutive term in March, he last week promised to attract investment of Rs one lakh crore in 'three years' to put Punjab on accelerated track of industrial growth. He has offered support to help major industrial houses to set up their manufacturing base in Punjab. One presumes that while making the promise, Sukhbir Singh must have been aware of the fact that during the Akali-BJP’s first term in office, NRIs who had decided to set up industries in the state had backtracked alleging impediments like red tape, complicated procedures and corruption in setting up new industries in Punjab.

The first reaction to Sukhbir’s promise to attract Rs one lakh crore of investment has come from a spokesman of the region’s industrial body who has described the promise as 'fool’s dream'. He has claimed that 'about 2,000 of Punjab’s over two lakh registered small and medium industrial units have packed up and moved out of the state in the past five years'. Over 2,500 units across Punjab have been waiting for power connection.

One of the government’s biggest and welcome administrative reform measures has been the Right to Service Act under which deadlines have been fixed for the fulfillment of 67 citizen services the non-delivery of which would attract punishment. The RTA will, no doubt, work in the case of big industrial houses having high political links and are normally generous contributors to the ruling 'parties funds'.

The efficacy level of the RTA and Sukhbir’s promise to attract Rs one lakh crore of investment in three years can be tested only if he secretly gets monitored the time it takes for a medium or small entrepreneur to set up a new unit in Punjab. The entrepreneur will be lucky if, after allowing his case to be dealt with in a routine manner, is able to get permission for setting up his unit even in two years. If he succeeds by ‘hotly’ pursuing his case from one table to the other of different departments authorised to give permission even then it may take a few months before he is able to set up his unit provided he gets power and land at reasonable prices.

There is a popular Punjabi saying Agga Daur, Picchha Chaur [Rush ahead even as disaster overtakes the past]. Punjab’s rulers seem to be following this dictum.
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