The ground reality of Punjab’s ‘good’ economic performance

  • Kesar Singh Bhangoo, Hindustan Times, Patiala
  • Updated: Jan 19, 2015 11:58 IST

A debate about the economic performance of Punjab is on among the state’s politicians, bureaucracy, intellectuals and economists. In this direction, at a state function recently at Patiala, an attempt was made to present a rosy picture of the performance by claiming that the GDP (gross domestic product) had increased by 100% during the first term (2007 to 2012) of the present ruling coalition of the state. But this failed to encourage the economists and public at large.

In economic literature, two types of economic changes — nominal and real — have been cited for the comparative performance of any economy over a period of time. Economic indicators such as the GDP, growth rate of the GDP, per capita income, per capita consumption, and poverty expressed at currents prices represent the nominal changes in economic performance; and at constant prices, represent the real performance of the economy.

A different way to compare

During the 1970s and the 1980s, Punjab was far ahead of the national average economic indicators and many states compared their figures with its. Unfortunately, as Punjab now has slipped behind many states in various economic and social aspects, we started comparing its indicators with the national averages, not with the figures of the leading states. According to Economic and Statistical Organisation (ESO), the gross state domestic product (GSDP) of Punjab in absolute terms has increased from Rs 1.52 lakh crore in the year 2007-08 to Rs 2.58 lakh crore in the year 2011-12 at current prices, i.e. 70% growth of the GSDP, not 100% as claimed in five years.

During the same period, the GSDP of India at current prices has increased by 83% and that of Haryana, Gujarat and Maharashtra by more than 100%. Punjab’s GSDP at the 2004-05 constant prices has grown only by 27%; and has increased from Rs 1.23 lakh crore in the year 2007-08 to Rs 1.56 lakh crore in the year 2011-12; while the GSDP of India at constant prices has grown by 35% during the same period. The annual growth rate of Punjab’s GSDP at the 2004-05 constant prices has declined from 9.05% to 5.92% over the same period. This again suggests that the claims regarding the GSDP growth at current as well as constant prices are not true.

More relevant indicator

The more relevant and proper economic performance indicator of per capita income suggests that it grew by 59% at current prices and only 17% at constant prices during the five years, while the per capita income of India has grown by 72% at current prices and 25% at constant prices in the same period. Similarly, the share of Punjab in the national GSDP at the 2004-05 constant prices has declined from 3.16% in year 2007-08 to 2.98% in the year 2011-12. This means that Punjab performed dismally at the national level.

National Sample Survey Organisation (NSSO) estimated that in Punjab, 8.4% population lived below the poverty line, a figure that was 9% in the rural and 6.3% in the urban areas. In the rural areas, Jalandhar is the least poor district with only 0.9% population below the poverty line, and Muktsar with the highest figure of 28.3% is above even the national average.

In urban Punjab, Kapurthala has the least poor population of only 0.2% and again Muktsar has the highest at 22.8%. The NSSO also worked out that the average monthly per capita consumption expenditure (MPCE) is Rs 847 for the rural and Rs 1,326 for the urban areas of the state. Fatehgarh Sahib district has the highest average MPCE of Rs 1,136 and Muktsar lowest at Rs 571 in rural Punjab. In the urban areas, Ludhiana has the highest average MPCE and Faridkot lowest.

Going down in south

The average MPCE and poverty ratios of southern Punjab, Muktsar, Mansa and Faridkot districts especially, present a miserable situation, even though state politics is concentrated in this belt for a long time. This strongly indicates that the improvement in the level of living might not have been distributed well and certain pockets of the state might have remained impoverished.

All the above economic indicators of Punjab economy suggest that the state is not doing as well as expected; further, if other social sector indicators, education and health especially, are also included in the discussion, then the scenario will turn to be depressing. The purpose of discussing economic indicators is not to contest the claims of the state’s rulers but to caution and aware the people of the state regarding the ground reality. Economic growth is necessary for the well being of citizens but not sufficient condition, if the fruits of the high economic growth do not reach the 8.4% poor people of the state. Therefore, efforts should be made for fair distribution of economic growth by initiating policy changes along with attaining higher growth of the GSDP of agriculture, industry and tertiary sectors of the Punjab economy.

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