Pulsating Punjab
Birthplace of the Green Revolution and the country's most prosperous state for decades, Punjab faced years of stagnation because of internal strife. How can the state lead the nation again?
Etymologically derived from the Persian words Punj’, meaning five, and Ab’, meaning river, the land of five rivers has always had an iconic status in the history of the country. It was the cradle of one of the world’s oldest civilisations, the Indus Valley Civilisation, and had an illustrious lineage of Sikh rulers who left behind a rich religious and cultural legacy.
The state also has a literary tradition dating back to the 12th century AD. It commenced with the spiritual hymns of Baba Farid, later compiled into the Adi Granth by Guru Arjan Dev in 1604. Medieval Punjabi literature reached its zenith with the mystic poetry of Guru Nanak, while Punjabi Sufi verse flourished under Shah Hussain and Bulle Shah. Punjab also bred the romantic tragedy genre of the Qissa, the most famous of them being Waris Shah’s Heer Ranjha.
Punjab has also produced some of the best sportspersons, businessmen, film stars and singers in the country. Bhangra, of course, remains its gift to the world. The Punjabi spirit of industry and entrepreneurship is legendary, with its diaspora becoming the stuff of success stories wherever they’ve gone.
At the same time, Punjab has also had its share of challenges. A vast fertile land that served as the northwestern frontier of the Indian subcontinent, the state has borne the brunt of invasions throughout history. It was brutally partitioned, amidst violence and lawlessness, in 1947, the western half of the province going to Pakistan, the eastern half remaining with India.
The further division of the state in 1966, with Haryana and Himachal being carved out of it, did increase the autonomy of the Sikhs as a religious and linguistic minority, but weakened their position in the larger national political scheme of things. Haryana became the bellwether for political competition across the Hindi-speaking belt of the north rather than a sub-region of Punjab, competing for resources and control within the larger state.
Punjab saw more upheaval in the 1980s, with the rise of the Khalistan movement, Operation Blue Star, the assassination of Indira Gandhi and the gruesome anti-Sikh riots that followed, and a sustained period of militancy. It has been politically stable in the past few decades, but its economy is yet to recover from the setbacks of the militancy years, and the resultant unemployment and social unrest have exacerbated a drug problem among its youth.
What Ails Punjab?
From being the fastest growing state of the country between 1966 and 1980, Punjab had slid to the mid ranks by the turn of the century. While other states surged ahead when Manmohan Singh ushered in economic liberalisation in 1991, Punjab started showing the results of the long years of militancy.
And so the erstwhile leader of the Green Revolution (1966-1989) saw its agricultural output growth rates fall by half between 1970 and 2010from 5 per cent per annum to about 2.5 per cent. Industrial growth grew marginally from less than 7 per cent to 8 per cent in the same period. The industrial policy resolution the state had laid down in 1978 was completely sidelined by the challenges of insurgency, condemning its economy to remain dependent on agriculture. Nor did the agricultural boom translate into industrial investment. In 1980, Punjab had a 15 per cent investment-to-GDP ratio, the same as for all of India. But by 2010, while the all-India ratio reached 38 per cent, Punjab stayed where it was.
From 1990 onwards, the state also started sinking in a sea of debt, something that plagues it to this day. According to the Economic Survey 2016-17, Punjab’s estimated debt of Rs 1,12,366 crore in 2014-15 increased to a provisional Rs 1,29,441 crore by 2015-16 and to Rs 1,38,166 crore as per the 2016-17 budget estimates. Weak institutional arrangements, a dysfunctional fiscal policy and a rising debt burden have continued to characterise the state, say economists Nirvikar Singh of the University of California, Santa Cruz, and Lakhwinder Singh of the University of Patiala.
Punjab’s growth has been trailing 11 other states since 2005. But there’s hope yet. Even through all the years of crisis, the state’s GDP has grown by more than 5 per cent per annum decade after decade, barring the slowdown in the 1990s. With 100 per cent irrigation, excellent infrastructure and an industrious and innovative population, the state can still turn its fortunes around and regain its past glory.
State of the State Analysis
With a firm belief that the country’s future lies in its states and Union territories, india today started its State of the States survey in 2003 to assess the performance of states. The State of the State was the next logical step. Our survey helps states identify their strengths and weaknesses by analysing the performance of each district over a period of time and across categories. In the case of Punjab, all its 22 districts were grouped under three divisions: Majha, Doaba and Malwa. Ruled by separate rulers in the past and their inhabitants speaking different dialects of Punjabi, the regions have different cultures and economies.
Sandwiched between the Sutlej and Beas, people in the Doaba region are called Doabias and speak a dialect called Doabi. It is the NRI hub of Punjab, given the large Punjabi diaspora in the UK, US, Canada, Europe, West Asia and Southeast Asia.
Majha, meaning the centre’, lies between the Beas and Ravi rivers and lies to the north of the state. Its people speak a dialect called the Majhi. With Amritsar and the Golden Temple situated in the region, it is the hub of religious tourism in the state.
Malwa, the southern region, is the largest, occupying 60 per cent of the area of the state (Doaba is 20 per cent and Majha 18) and also the richest.
A district-wise analysis of these three regions by our survey has identified the problems in the various sectorsprimarily agriculture, industry & services and education. By recognising these problems and implementing the suggestions to overcome them, Punjab can once again get back on the trajectory of high growth. Here is an overview of the problems endemic to each sector and how they can be rectified.
Agriculture: The Price of Too Much Success
Its network of sophisticated canal irrigation since colonial times and history of agricultural success led the Indian government to select the state for its new High Yielding Variety (HYV) of wheat seeds, which Punjab’s wheat and rice farmers use till date. From less than half the farmland at Independence, irrigation covered 98 per cent of Punjab by 2010, the highest in the country. Chemical fertiliser use per acre has increased six-fold in the five decades since the Green Revolution; cropping intensity has gone up from 125 per cent in the 1960s to almost 200 per cent today. The share of wheat and rice has grown from half the cropped area to more than three-quarters while yields have more than doubled since the 1970s. By 2000, Punjab’s share in India’s procured wheat and rice was more than half; in 2015-16, it contributed 36.8 per cent of wheat and 27.3 per cent of rice to the central pool. With less than 1.5 per cent of India’s land area, Punjab has long served as India’s granary, ensuring the country’s food security and providing a major impetus to India’s subsequent rapid growth.
With help from the central government, Punjab developed a physical and institutional infrastructure that supported private players in realising the full potential of their investments in agriculture. Modern production methods, use of tractors and HYV seeds, supported by effective research and assured markets, allowed the agricultural sector to thrive and prosper. The substantial employment opportunities generated attracted large-scale migration of labourers from the eastern states of Bihar and Uttar Pradesh to Punjab while the Punjabis outmigrated to Europe, Canada, Australia and the US. Complementary economic activities, such as an agricultural machinery industry, transport and services, also started flourishing.
But the massive fuel and other subsidies to wheat and rice also distorted crop choices, making paddy more profitable, and thwarting government efforts to diversify crops. Also, the crop diversification policy, as agricultural economist Sukhpal Singh from IIM Ahmedabad points out, directly and indirectly, [extended] support for farmers with large-sized holdings, but failed to provide recommendations for the crisis-ridden small peasantry of Punjab. The result was agrarian distress, characterised by farmer and agricultural labourer suicides.
The share of agriculture in Punjab’s GVA (gross value added), which stood at 31 per cent in 2011-12, has now come down to 26 per cent even as cropping intensity and irrigation potential have been exhausted. Growth in agricultural productivity has also reached saturation point, with very few R&D advances in recent years.
What is worse, the depletion of soil, the rapid sinking of the water table, the deteriorating quality of water and environmental degradation have begun to pose an ecological challenge. In a study published in the Arabian Journal of Geosciences in 2018, 76 samples from all 16 districts of Malwa, examined on two international parameters that assess the quality of water for irrigation and drinking purposesthe Langelier Saturation Index (LSI) and the Sodium Absorption Ratio (SAR)found the groundwater unsuitable for use. Concentrations of calcium, magnesium, sodium, nitrate and fluorine in the water were higher than the permissible limits, leading the researchers to conclude that 80.3 per cent of the water in Malwa was unsuitable for drinking while 70 per cent of it was unfit even for irrigation. And continuous use of low-quality water only reduces the fertility of the soil in the long run.
Nirvikar Singh suggests an alternative strategy for developing community-based solutions and farmer cooperative companies for sustainability of the diversification of Punjab agriculture, based on the success stories of farmer companies thriving in other states. He suggests several alternative solutions such as contract farming and environmentally safe crops, but all this will need innovative new institutional arrangements, which the state government may have to provide.
Industry & Services: Destiny’s Stepchildren
Punjab, a top destination for businesses at one point, eventually lost that slot to Gujarat, Haryana and Maharashtra. Economic liberalisation also changed the character of many of Punjab’s leaders from statesmen-politicians to businessmen-politicians. The state’s political leadership used populist measures to gain political legitimacy on the one hand, and used state power to promote their business interests on the other, via easy government contracts in rent-thick sectors.
It led to a neglect of industry and also, as Nirvikar Singh points out, the services sector. The sheltering of the agricultural sector, he says, lulled the economy into a kind of complacency which robbed it of the incentives to develop the services sector where the rest of India has had huge successes.
Finally waking up to this reality, the state has in recent years started directing investment towards industry. For one, Punjab is aiming to become an engineering hub, particularly in Ludhiana, Jalandhar, Patiala, Sangrur, Moga, Hoshiarpur and Sas Nagar (Mohali) districts, which are home to many engineering companies. The manufacturing sectors are mainly concentrated in the following sectors: textile and apparel; automobiles and auto components; cycle and cycle parts; light engineering; leather and sports goods; petrochemicals and secondary steel; agri and food processing; electronics; and biotechnology and pharmaceuticals.
Punjab also plans to construct an industrial hub around the Eastern Dedicated Freight Corridor (EDFC), which will cover important towns such as Rajpura, Sirhind, Doraha, Sahnewal and Ludhiana. Plans are also afoot to develop Chandigarh-Ludhiana-Amritsar and Chandigarh-Hoshiarpur-Gurdaspur as urban industrial corridors. The state is also planning to set up sector-specific industrial parks, such as an automobile manufacturing park, preferably alongside the dedicated freight corridor; a leather apparel park near the upcoming Footwear Design and Development Institute; a sports goods park at Jalandhar; plastic parks at Bathinda and Ludhiana; an aerospace and defence park; advanced manufacturing parks, especially along the Amritsar Kolkata Industrial Corridor, among other initiatives. Such industrial clusters are expected to transform Punjab into an industrial state that can compete with Gujarat and Maharashtra in the west and Tamil Nadu and Karnataka in the south.
Mohali, in SAS Nagar district, has been developed as the IT hub of the state. Perhaps smaller compared to Bengaluru, Hyderabad or Gurugram, it still has a sizeable number of small software companies besides Tata Business Support Services, Industrial and Financial Systems, SmartDate, Integrated Data Services and Seasia. Mohali’s strategic location near an international airport is also an advantage. The state has declared SAS Nagar as a brownfield electronic cluster; 40 acres of land has been earmarked for the greenfield ESDM sector.
Education: A Case for Higher Studies
Investment in human capital through education is critical to the future of any economy. Punjab, which scores fairly high in infrastructure, was 20th in terms of education, according to the SOTS survey.
The Indian School of Business (ISB) campus in Mohali is an example of how things can progress, with specialised institutes for manufacturing, healthcare, infrastructure and public policy, funded by state business interests. But, according to economist Nirvikar Singh, the ISB is an elite private institution that will serve a small minority of the country’s, let alone the state’s, students.
At the other end of the spectrum is the Punjab Technical University, with as many as 400,000 students across India. In the middle lie the traditional universities, such as the Panjab University and the Punjabi University, with centres of excellence, but they are hampered by legacy models of education delivery and institutional and financial arrangements.
Achieving the requisite scale, agility and quality in Punjab’s higher education will require importing individual and organisational expertise. National-level liberalisation of entry by foreign education providers should be seized proactively by Punjab’s industry and government. Such providers, with established brands, have an incentive not to behave as fly-by-night operators. Mohali, Punjab’s hill areas and the fading but still palpable grandeur of the former princely states of Patiala and Nabha can be attractive locations for new educational facilities, says Singh. Concentrating educational developments around Chandigarh would be a mistake. Educational centres should spring up in small towns and places like Talwandi Sabo and Tarn Taran, he adds.
Meanwhile, the boom in information technology (IT) led to several southern states greatly expanding education in the sector. Emerging from a decade-and-a-half of turmoil, Punjab lagged in training students with the necessary skills for these new jobs, while those with the skills sought the better opportunities of Bengaluru, Hyderabad and the Delhi NCR.
Nirvikar Singh, however, believes investments in education required are across a range of sectors, not just engineering and IT. Agricultural science, biological and life sciences, and manufacturing technology are areas where Punjab can build human capital capabilities, by expanding and upgrading higher education in the state.
Essentially, human capital investment has to match market needs and therefore needs to be shaped by the strategic vision for the state’s future development, which will determine what kinds of jobs will be available. Furthermore, industry in the state needs to help in formulating a strategy for building human capital.
The Way Forward
What is the way forward for Punjab? Professor Aradhana Aggarwal of the Copenhagen Business School, Denmark, believes a structural transformation of Punjab’s economy is the key to future growth. Economic growth and manpower planning need to be integrated for solving the unemployment problem, she says. The system of flexibility in the labour market should be combined with the income security of workers, and the state should provide assistance in retraining and relocation of the workers.
The state needs a strategic and comprehensive vision for future economic development. It should include an alternative agricultural strategy emphasising crop diversification away from paddy and wheat, a new industrialisation paradigm focusing on the services sector, an environmentally-safe manufacturing sector and an accelerated investment in human capital at several levels, from basic skill acquisition to world-class higher educational institutions. This process requires government and industry to jointly take a proactive role in mapping possible futures. Nothing will then stop Punjab from becoming the crowning glory of Indian states once again.
Methodology
The India Today State of the State study of Punjab identifies broad trends of economic development and ranks the performance of its 22 districts across 10 categories, each a composite index of parameters for which uniform, continuous data is available. The rankings are based on the Borda method, in which voters rank options/ candidates in order of preference. The evaluation has two segments: best performing district at a particular time and the most improved district over the past decade. The most recent year is used to rank the best district. The difference between the most recent category value and the value 10 years earlier is used to rank the most improved district.
The data was collected and standardised by research agency Nielsen from sources such as the Census, National Sample Survey, RBI, District Information System for Education, National Crime Records Bureau and District Level Health Survey.