After the win: Challenges facing the new Punjab govt

The government will have to work hard to fix the economy of Punjab, for it will not be in a position to fulfill most of its promises if it doesn’t have the funds. At present, the Punjab government has an outstanding debt of Rs 3 lakh crore, which is 56 per cent of its GSDP. In 2020-21, the government spent 54 per cent of its tax revenue on repaying the interest on its debt. Its per capita income has also been falling continuously for the last two decades, taking it from No 3 among the states to No 19 last year.

Mafia raj

One big reason for the state’s empty coffers is the revenue leak in several important sectors. Be it liquor or sand, very little revenue comes to the state. Despite the excise department setting a price band for various liquor brands, the liquor prices vary from one vend to the other. Insiders attribute it to the monopolisation of the trade by a few syndicates, who at places don’t even allow marriage venues to serve liquor unless it is bought from their vends.

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Illegal sand mining was the bane of the previous Congress government. Even though the Channi government slashed the rates, people on ground say the mafia continues to control the prices wherever it can. Former CM Capt Amarinder Singh had gone so far as to say that many of his legislators were involved in illegal mining.

This practice, which leaves behind a wasteland, is so deeply entrenched that it carried on even during the polls. Only last week, the State Level Environment Impact Assessment Authority (SEIAA) flagged complaints about illegal mining on the Satluj river bed.

Agrarian crisis

Punjab takes pride in the fact that it ranks 7th as gross producer of wheat in the world and generates the third-largest marketable surplus after Canada and Australia, which is about one-tenth of the global trade in wheat. In case of rice, its market surplus is second only to Thailand.

But the indiscriminate sowing of paddy—as per the agriculture department, the area under rice has increased by 895 per cent in the last 40 years while its production has gone up by 3307 per cent– is pushing the state towards desertification. A study by Punjab Agricultural University has found that its groundwater is overexploited in 18 districts of the state, where it has dipped to below 30 metres from 3 to 10 metres in 1998.

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The rising cost of inputs with no corresponding rise in prices coupled with the indiscriminate use of pesticides and fertilisers is leading to stagnation in the income from the fields. A report by Indian Council for Research on International Economic Relations in 2017 found that the agriculture growth in the state started stagnating in the last two decades, falling from 5.07 per cent per annum in 1986 to only 1.6 per cent in 2015.

A poster boy of the green revolution, the state is now known for its burgeoning farm debt—as per National Bank for Agriculture and Rural Development (NABARD) in July last year, 21.94 lakh bank accounts of farmers in Punjab have an outstanding agricultural debt of 71,305 crore.

The farm agitation was born out of this agrarian distress that routinely leads to farmer suicides. While in the run-up to the polls, parties come up with solutions figuring the two Ds of diversification and debt waiver, coupled with remunerative prices, implementation remains a challenge.

Jobs and the exodus of youngsters

Punjab, known for its entrepreneurial people, has failed to progress from agriculture to industry in the last seven decades. The dark decade of militancy in the 1980s resulted in the flight of industry from several districts in the state but more than three decades later, it is yet to woo it back.

With neighbouring Haryana and Himachal offering tax sops and other rebates, the state has seen a flight of pharma, textile and now the bicycle industry to states as far as Chhattisgarh and Madhya Pradesh. The recent overtures were offset by the political uncertainty in the state.

At present, Punjab ranks in the bottom 10 for its ease of doing business. The overwhelming perception that the businesses are controlled by politicians keeps big investors at bay. Even though the Wagah border provides it an excellent avenue of trade to the Middle East, the decision to raise import duties on trade with Pakistan to 200 per cent has choked this route.

With the unemployment rate at 7.4 per cent, according to the third NSO report for the year 2019-20 (released in July 2021), against the national rate of 4.8 per cent, the state is seeing an exodus of youngsters as soon as they leave school. Despite the pandemic last year, over 1 lakh students left for foreign shores, and an equal number is in the queue.

Once flush with remittances, banks are now reporting a monthly outflow. While every party has promised to stem this flow, how will they go about doing it is the question.

Drugs and border security

Drugs are an ugly reality in the state with every successive government failing to plug the flow. A 2015 study by the Union government titled ‘Punjab Opioid Dependence Survey (PODS)’ had concluded that the state had the highest percentage of population using drugs.

The Amarinder government promised to wipe out the menace but to no avail. In the run-up to the polls, the state Election Commission seized over 4000 kilos of narcotics worth 376 crore and 59 lakh litres of liquor, the highest seizures in the five states that went to the hustings.

Closely intertwined with drugs is the threat of cross-border smuggling of weapons now made easier through drones, and the ever-present danger of terror modules in the backdrop of a dangerously unstable neighbourhood.