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Need to catch up with other states

‘Punjab is number one and will remain number one’. This is the gospel truth for every party in power, past or present, and it never changes with the change of guard. Is Punjab really the number one state? This is a complex question that has a complex answer.

chandigarh Updated: Feb 04, 2015 18:42 IST
Punjab fiscal health

Senior-BJP-leader-and-an-MLA-from-Jalandhar-Manoranjan-Kalia

‘Punjab is number one and will remain number one’. This is the gospel truth for every party in power, past or present, and it never changes with the change of guard. Is Punjab really the number one state? This is a complex question that has a complex answer.

A government’s primary duty is to levy taxes and spend the revenue so generated in such a way as to make every individual of the state perform economic activity in the same direction, as decided by the government. The multiplying effect of the economic activity performed by the government as well as individuals is the all-round development of the state. The amount of money spent on development projects increases with the passage of time. The inflation factor and the increase or decrease in the monetary value have to be taken into account for ascertaining the actual comparison of development of the state.

The comparative study of fiscal health vis-à-vis that during previous tenures of governments in Punjab or vis-à-vis that of other states is the touchstone to measure where Punjab stands. Compared to previous regimes in the state, Punjab now stands on a better footing in terms of performance, but a comparison with other states reflects the reality to a great extent.

Dependence on central grants

Every state in India has to depend on central government funds to run its economy. If the state contributes little and is being run solely through central grants, or if there are delays in contributing the state share or delays in percolating central grants to the end users, it is not a good situation even if the figures depicts good health of the economy.

Punjab is better placed today, if viewed through the prism of revenue generation, per capita income and road density ratio. The state’s progress after Independence is largely due to the enterprising nature of Punjabis who brought Green Revolution during the 1960s and the industrial revolution during the 1970s. With the advancement of technology in agriculture, the growth rate in the agriculture sector of states such as Gujarat, Madhya Pradesh and Chhattisgarh has surpassed that of Punjab.

Stagnation in agri growth rate

The state is facing stagnation in growth rate of agriculture and needs a big push in diversification of crops, thereby assuring better returns than that of wheat and rice. The 1970s and 1980s was the era of subsidisation when Punjab saw industrialisation. The state based its industrial growth during the 1980s on the import of raw material from other states, followed by value addition and re-export. So, there is a hosiery industry, but we do not have our own wool; there is the sports industry, but the willow is imported from Jammu and Kashmir; the rubber industry imports rubber from Kerala, while Mandi Gobindgarh has Asia’s biggest steel mandi, but Punjab does not have iron ore. With the fizzling out of the era of subsidisation, the level playing field of the above-mentioned industry also withered away and needs to be protected, lest it dies a slow death.

The other factor to gauge a state’s fiscal health is the engine of growth. Infrastructure as an engine of growth is a key to fiscal revival. In terms of infrastructure, Punjab is doing better than its performance under previous governments, but vis-à-vis other states, a lot needs to be done.

Debt is good for the state, provided it is taken for building capital assets. If it is taken to service previous debts, it is bad economics.

What matters most to prove that the economy is in the pink of health are not statistical figures but what the people of the state feel about governance. If it’s good, statistics do not matter; if bad, rosy statistics cannot satiate. Let the intelligentsia contest the jugglery of statistics -- whatever is best administered is the best.

The writer is a senior BJP leader and an MLA from Jalandhar. The views expressed are personal.

Tomorrow: Prof Lakhwinder Singh, Punjabi University, Patiala

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