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A broken state or breakout state?

chandigarh Updated: Feb 02, 2015 13:53 IST
KR Lakhanpal
KR Lakhanpal
Hindustan Times

‘Give me the facts, not statistics,’ shouted a wise man. For, statistics tend to conceal, obfuscate and even falsify facts. Such a caveat is in order in the current debate, in Hindustan Times, on “Punjab shining versus Punjab declining”. Inarguably, there are obvious limitations in viewing a state’s socio-economic progress or otherwise in terms of a single statistic, such as gross domestic product (GDP), per capita income or per capita expenditure.

Recognising this, measures of socio-economic indicators, incorporating multi-dimensional indicators, have been devised. These include the human development index (HDI), millennium development goals, and even a happiness index.

Nevertheless, GDP and per capita income continue to be the most commonly used and easily understood indices for measuring economic progress and for comparative analysis over time and space. It may, therefore, not be prudent to altogether ignore this measure, while we continue to develop and use exhaustive benchmarks for gauging the socio-economic progress of an economy.

Paradoxical growth story

Punjab’s growth story is paradoxical. For 30 years (1950 to 1980), Punjab clocked in an average annual growth of about 5%, while the country’s economy grew at an annual average rate of 3.5%. During the 1980s, Punjab grew at 7%, against the national growth of 5%. In the next 20 years, post economic reforms, the trend reversed, with the national economy growing at 7%, against Punjab’s a tad above 5%.

This paradox is, however, not inexplicable, when viewed in the context of Punjab’s early-bird-advantage in ushering of the Green Revolution, consolidation of holdings, rural road connectivity and rural electrification. This advantage started petering out in the mid-1980s and got totally exhausted by the turn of the century. In the meanwhile, the other states did the catching-up and displaced Punjab, first as the highest growing state and, thereafter, as the highest per capita income state. This was compounded by Punjab’s failure to use the early-bird-advantage to push the state into a higher orbit of growth and due to the advent of competitive populism and winner-takes-all as the dominant strands in its body politic. The ruling elite is yet to take an honest call on reversing this strand and to firmly resolve to do what it takes to put Punjab back at the top of the league table of states.

Blame game

In the meanwhile, the name of the game is to apportion the blame and make claims and counterclaims about the state’s socio-economic progress or decline. To buttress their respective claims, arguments are marshalled by selective and out-of-context use of statistical data. One such argument is: don’t bother if Punjab has slid from the first to the eighth position in per capita income, because we continue to be at the top in terms of per capita expenditure among the states. Elementary economics teach us that there is a sequential relationship between income, spending, savings and investment. Spending, without income, is possible only be selling family silver, raising huge loans and sacrificing future investment for current consumption. Continued over a long period of time, such a recipe will lead to bankruptcy and hyper inflation, which are detrimental to sustainable growth and development.

It is in this background that we need to analyse if Punjab is a broken state or a breakout state, capable of escaping the middle-income trap, a term used for economies that reform enough to make the first transition, but fail to make the second transition. On the current evidence, Punjab, sadly, qualifies to be a broken state.

It is evident from its sub-par growth; empty treasury; onerous debt burden; humungous revenue deficit; rickety infrastructure; stinking cities; broken schooling and public health systems, selective enforcement of law and blunt instruments and instrumentalities of governance, for which successive governments, across the aisle, are responsible.

For rising to its full potential, Punjab requires a far-seeing, strong-willed and committed leadership, which its people owe to it. For, as George Bernard Shaw famously said, “Democracy is a mechanism that ensures that we do not get a government better than we deserve”.

There is no doubt that the valiant and enterprising people of Punjab will effectively deliver on this challenge. Thus, Punjab will hopefully transit from a broken state to a breakout state.

Recognise problem

However, breakout states are propelled by breakout events. The first step towards solving a problem is to acknowledge its existence. Therefore, the first breakout event is that the government must recognise that the state is caught in a terrible downward economic spiral, and is faced with an empty treasury. It will be impossible to come out of this morass without radically reinventing government and without salvaging the state’s finances. Harkening back to the tragic days of militancy and discriminatory attitude of the Union government towards the state as explanations will be of little help.

The solution to this problem has to be found in Chandigarh, not at Delhi. But once the state government firmly resolves to face this problem and takes effective steps towards its solution, there would be no dearth of helping hands from various quarters.

Secondly, the size and stretch of the state government is too large and unwieldy to be effective and economical. There is a need to roll back the government by cutting slack, sloth and redundancies and winding up all outfits that don’t deliver the bang-for-the-buck. The quality of public expenditure is abysmally poor and nearly a total waste. The government is too centralised and needs to create vibrant urban local bodies (ULBs) and Panchayati Raj Institutions (PRIs) by undertaking effective decentralisation, delegation and devolution.

Besides, partnerships between the government, corporates and non-profit organisations need to be forged for better and cost-effective delivery of public services.

Disruptive innovations

Thirdly, the government has lost its mojo for steering the state out of trouble. It must regain it by disruptive innovations rather than pandering to myriad vested interests for electoral gains, for nobody wins for ever, at least in a functional democracy.

Lastly, good governance must be embedded in the rule of law, as Francis Fukuyama, in his ‘Political Order and Political Decay’, has defined. He says, “I define it as a set of rules of behaviour, reflecting a broad consensus within society, which is binding on even the most powerful political actors, whether kings, presidents or the prime minister. If the rulers can change the law to suit themselves, the rule of law does not exist, even if laws are applied uniformly to the rest of society.”

In other words, good governance requires rulers not only to know how to govern others, but also to know how to govern themselves. Without such transformative changes, Punjab may, lamentably, continue to be a broken state.

(The writer is a former chief secretary, Punjab. Views expressed are personal.)

Tomorrow: Prof Sukhpal Singh, Indian Institute of Management, Ahmedabad.