Punjab Today- A very good article

MOHAN GURUSWAMY:

The Downfall of Punjab.

 

Back in the early 1980’s I was driving through rural Punjab through its golden farms heavy with wheat and observing the clothes and visible lifestyles of most and observed to my fellow traveller, an English economist, that if all of India attained as much as Punjab India would be an economic power to reckon with!

There was a time when Punjab was India’s model state. It was number one in almost every field. From being the role model state it has now become a disaster zone and a national burden. How this happened is a lesson to policy makers. Punjab has the best agricultural and most irrigated land in the country. Its hardy and enterprising Jat Sikh peasants dispossessed of their lands in west Punjab due to the partition found a land just as welcoming and put their energies and genius into making the best of it. When India faced crippling food shortages in the early 1950’s, it depended on Punjab to bail it out. Its enterprising peasants were quick to adopt the new varieties that came out of the laboratories of Norman Borlaug. To incentivise its farmers the central government began a policy of procurement assuring producers of a ready market and increasingly better prices. 

This was the beginning of the Green Revolution. So much so, today the market price of a quintal of wheat is about Rs.5-600 less than the Minimum Support Price at which the state buys. As the gap between MSP and market prices kept widening it only incentivised more production. The green revolution spread to other parts of the country and now India finds itself in a situation when it produces more than it eats.

It has been saddled with corrupt governments for several decades now. The Khalistani insurgency cost it more than just in lives. Good governance norms went out of the window too. 

 

The Badal family managing agency in Punjab has done better than many of our industrialists in fraudulently extracting funds from our PSU banks by borrowing for its food purchase scheme against non-existent stocks or by disposing off hypothecated stocks. Nonetheless, the INC government led by Captain Amarinder Singh also sought and received quite a huge amount of funds from the central government as a compensation to its revenue deficit. Failure of the state government in collecting revenue, for instance, only 38% of the estimates of budget of FY2020, compelled it to rely continually on centre’s funds. Not to ignore the fact, the loss of revenue is due to structural imbalances in the indirect tax system – GST. Captain Amarinder Singh has constantly been accusing the central government for failing the state of Punjab on all fronts. However, the BJP-led central government did not stop itself from granting funds, loans and grants-in-aid to the state. In addition, as RBI refused to extend the loan repayment worth Rs.90,000 crores by state procuring agencies, the government of Punjab was at the verge of becoming non-bankable and the loan amount an NPA. The central government came to Punjab’s rescue despite the latter’s opposition against the former’s farm laws. It also sought Rs. 1,000 crores from NABARD for cooperative institutes in the state in November last year.

 

The former Punjab Civil Supplies and Food Minister, Adarsh Prakash Singh Kairon, a man with a prominent and known lineage, had  the temerity to once say: “The food purchase scheme is not a profitable proposition. Punjab is mainly doing it in the national interest.” The notion that Punjab feeds India is quite absurd now. India has for a few decades now produced much more food grains than it needs. India exported food grains worth an average of Rs.6000 crores a year since 1991 and last year it touched Rs.27,000 crores. The production has been in the vicinity of 285 million tons during the past three years. India has food reserves of 82 million tons that is 2.7 times more than is needed.

 

So it is actually the other way around. The rest of India supports Punjab, with this absurd minimum support price (MSP) scheme, which is actually an above the market price scheme. This combined with the PDS of low priced cereals is actually a gigantic subsidy scheme.  The bulk of the procurement accrues in the states of Punjab, Haryana, AP and MP. Which means the bulk of the MSP subsidy accumulates here. Punjab stays way ahead of rest of the states in the country. In fact, Punjab’s farm subsidy is higher than the annual income for farmers in the rest of the country. Each Punjabi agricultural household gets an annual subsidy of Rs 1,73,165. According to SBI’s NAFIS survey, the annual income of agricultural households is Rs. 2,77,596 which is higher than twice the national average.

 

There is no doubt that Punjab is a major food grains production centre, but the notion that it feeds India is quite exaggerated. In the year 2019-20 of the total national food grains production was 292 million tons, of which Punjab produced about 11.06%. Admittedly Punjab’s productivity is much higher than the rest of the country’s as it accounts for only about 5% of the 54 million hectares of irrigated farmland.

 

The claims of the Punjab government too foster this fiction. Its website claims “ It contributes nearly two thirds to the total production of food grains and a third of milk production in the country. It is the leading producer of wheat, thereby contributing to the national food security. Even though Punjabis account for less than 2.5% of the Indian population, they are one of the most prosperous races in India. Their per capita income is twice the national average.” The national per capita income at current prices is Rs.1,34,226 and Punjab’s is Rs.1,66,830. Yet most of us have internalized the long gone story of Punjab standing between India and starvation, and Punjab being the most prosperous state in the country.

 

God and this country have both been good to Punjab. Today about 82% of all land in Punjab is arable and 98.6% of it is with perennial irrigation. More than half of this is due to the huge central government projects, Bhakra Nangal being the most notable among them. The British in their quest for land revenue rightly chose Punjab for special attention. They invested in its irrigation. But after 1947 this trend accelerated. In this year 1955 the total national outlay for irrigation was Rs.29,106.30 lakhs. Of this Punjab got Rs.10,952.10 lakhs or 37.62%. By contrast Bihar got only Rs.1,323.30 lakhs, which is only 4.54% of the irrigation outlay. The Bhakra Nangal dam, one of Jawaharlal Nehru’s grandest temples of modern India, planned with an outlay of Rs.7,750 lakhs, alone irrigates 1.44 million  hectares or about 40% of Punjab’s net irrigated area. The consequences of this bounty are manifold.

 

The spectrum of regional inequalities in India is a very wide one. Punjab and Bihar represent the two ends of the wide spectrum. Though this might even have been the case historically, a study of state GDP’s in the decades after independence reveals that the width of the spectrum has only widened. In 1965 Punjab’s per capita income was Rs.562 and was 1.7 times that of Bihar’s Rs.332. Punjab now has a per capita income of Rs. 1,66,830 and Bihar Rs.46,664, or about 4:1. But other changes have also set in. Once India’s most prosperous state, it now lags behind Haryana, Maharashtra, Gujarat, Kerala and Telangana as is about par with the neighboring hill state of Himachal Pradesh.

 

Punjab has all the bounties nature can give, and it has had more than its rightful share of central government assistance, not just in terms of food procurement and subsidies but also by way of employment.  Punjab has also benefited by a disproportionately large recruitment into the armed and paramilitary forces giving most rural families a second stream of income.  Each year about 60,000 Punjabi officers and men retire from the armed forces and over a million draw pensions. Yet Punjab is afflicted with a severe blight. A study by the department of Social Security Development of Women and Children found that 67 percent households in Punjab have at least one person addicted to drugs. Yet another study by the Narcotics Bureau discovered that almost 51.6% of youth in Punjab are addicted to drugs.

 

So what has brought Punjab to this pass? One is that Punjab has been reeling under bad governments. Its politicians and their bureaucratic fellow conspirators, irrespective of party affiliations, have been among the country’s most venal and corrupt. Recently, IPS officer Paramraj Umranangal, along with four other PPS officers were suspended by the Punjab government based on a report by the anti-drug special task force for their alleged role in drug smuggling. With porous borders, drug dealings in Punjab are on a high. 

Yet other one is the predicament of youth in the state. The state’s school dropout is among the highest in the country. Young Punjabis today do not want to study, do not want to compete or ride the wave of reform and growth in India. They want to escape and run low-level services overseas or fill up European jails as illegals and drug peddlers. This brawn drain of sorts is modern Punjab’s answer to brain drain. The most flourishing business in Punjab, besides narcotics, is illegal immigration or what is called, for some reason, kabootarbaazi, as if all young Punjabis now are pigeons wanting to fly the coop.  

Even when it comes to debt management, Punjab has failed to come out of the crisis. Interestingly, even over 70 per cent of the new loans being taken by Punjab are being used for repayment of old loans. Unless Punjab gets a better government and better governance that addresses all the persisting impediments, the downfall will continue.

 

Mohan Guruswamy

Email:  mohanguru@gmail.com  

April 22 2021