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Stats often hide more than they reveal

Statistics and mathematical derivations are often used to prove or justify a viewpoint. Yet statistics are also painted, and justifiably so, as ‘lies, damn lies and statistics’. These derivatives are, in fact, double-edged weapons.

chandigarh Updated: Jan 29, 2015 10:57 IST
SS Johl

Statistics and mathematical derivations are often used to prove or justify a viewpoint. Yet statistics are also painted, and justifiably so, as ‘lies, damn lies and statistics’. These derivatives are, in fact, double-edged weapons.

For instance, Punjab agricultural sector growth is shown as lower than that of several states in India and even lower than that of the country as a whole. This misreads the situation because growth rate must be read with reference to the base. A growth of one unit on base ten is not the same as that on base hundred.

Punjab agriculture sector productivity is much higher than that of other states. Hence, even higher-level absolute increase in productivity shows comparatively lower rate of growth compared to that in other states with lower level of productivity base. Similarly, averages and other derivatives hide the facts more than they reveal.

Performance of economy

A better way to judge the performance of the economy of the country or of the states and even the sectors within is to look into the gap that exists between the optimal of resource-based potential and the actual achievements. There is no doubt that compared to other states, Punjab is better placed in respect of per capita income and lower disparities in income distribution. This is partly because of the leading agriculture sector, small and medium-level industries, lack of extra-big industries and service enterprises, higher level of wages and dominance of middle class in the state.

This is so in spite of the fact that Punjab provides nearly one million jobs to the migrant labour from other states and has the highest percentage of scheduled caste population. The state also contributes more than twenty million tonnes of foodgrains to the central pool.

On the educational front, the state has more healthy and flourishing private sector schools, colleges and universities, though the public sector education is in a shambles. In health sector, all big cities and even towns have private sector multi-specialty hospitals though government health services are of indifferent quality. Road infrastructure is being developed, though at a slow pace. Rail-road connectivity is reasonably good. Villages are all electrified and connected with roads. Overall, one can derive satisfaction when the development of the state is compared with that of majority of the states.

No complacency

Yet, Punjab should not derive extra solace from these comparisons. The state needs to compare its performance with the potential it carries based on its resource base and should be duly concerned about the financial mess it is progressively getting into by the day. First, consider the debt trap the state has virtually fallen into. There is not only the direct debt of about rupees one lakh thirteen crore, that too carrying the highest rate of interest because of large part of it being from small savings, but also the debt on loss-making zero/negative equity state corporations taken under the sovereign guarantee of the state. This is a huge burden on the state exchequer by way of interest and debt repayments, being mostly met out of fresh borrowings. These borrowings on capital account could be fully justified if used for spending on capital account for creating assets that generated additional repaying capacity.

Unfortunately, because of the state budget running into revenue deficit for decades, these resources have been used on revenue account to meet committed liabilities of salaries, pensions, interest and debt repayments due. Again, the state is keeping about Rs 3,000 crore of income from agricultural markets as extra-budgetary provision which is being used sub-optimally under vote-bank politics.

Agri subsidies

Think of the subsidies amounting to more than `6,000 crore, especially the agriculture sector subsidies. Had these subsidies been targeted to the small and marginal farmers only, the state could easily save at least 50% of scarce financial resources that flow to the undeserving persons in this sector.

Unfortunately, the political authorities in the state have opted not to see and take remedial measures for the deteriorating soil health, air getting polluted, water getting poisoned and water balance being adversely affected through overdrawal of subsoil water on account of water-intensive and environment-unfriendly cropping pattern of the state. Not only that, free power does not benefit the farmers even.

On the other hand, industrial and domestic sectors suffer a huge loss through scheduled closures and unscheduled power cuts and government loses tax revenue by diverting power supply from paying sectors to the non-paying sector, part of which is being bought at high costs, from other states.

Governments of all hues over the last two decades have failed to plug the huge tax evasion and rationalise the resource use to achieve optimal growth and development of the state economy. The powers that be should not derive solace from being andhon maen kana raja (one-eyed proud among the blind). Punjab has much higher potential for development, yet the state is crying for rationalisation of taxation and expenditure policies. Unfortunately, there is enough number of expert committee reports gathering dust on the shelves of the administration, which can be of tremendous help in this direction. The government and the administration need to wake up to the field realities.

(The writer is a renowned farm economist and chancellor of Central University of Punjab, Bathinda. The views expressed are personal.)

Tomorrow: Manpreet Singh Badal, former finance minister of Punjab