By rejecting the medium- and lengthy-term financial method suggestions of the Group of Experts headed by former finance secretary and Planning Commission deputy chairman Montek Singh Ahluwalia on grounds that it was anti-farmer, Punjab chief minister Amarinder Singh has created it clear he is going to be guided by political considerations alone, and not any need to get the state out of the financial rut it is in. Never thoughts that it was mainly because the state was slipping so badly – from the highest per capita earnings amongst the key states in 1999, it slipped to 10th position in 2019-20 – that Singh asked Ahluwalia to recommend a way forward for the state. While the report is not just about the state’s agriculture, like Punjab’s fast desertification due to huge overuse of water, fixing the sector is important if the rest of the economy is to prosper. The report has vital ideas on how to revive manufacturing, like the promotion of startups and higher use of digital technologies, but fixing agriculture is central to every little thing for a selection of factors.
For one, with the state spending as considerably as 1.9% of its GDP on energy subsidies for agriculture – these grew, this newspaper reported, from Rs 5,670 crore in FY19 to a most likely Rs 7,180 in FY21 – it has tiny left to commit on producing improved facilities for either manufacturing or services. Indeed, as the 1st report of the Group of Experts points out, the higher electrical energy subsidy has resulted in a scenario exactly where the total capital expenditure in the price range is only about 1.6% of the state’s GDP the electrical energy subsidy, in turn, is what tends to make it achievable for farmers to pump up water, so Punjab’s desertification can not be slowed till this is fixed. If electrical energy subsidies for agriculture are rationalized, this will also aid lessen energy fees for manufacturing and should really Punjab create a meals processing business, as the report recommends, that will also enhance the MSME sector and build a lot of jobs in the state.
It is understandable that, in the face of a huge farmer protest, the state’s chief minister is reluctant to accept a report whose key suggestions on agriculture mirror the Central farm laws the unions are protesting against, but it is not clear what other alternatives the CM has. Even with the Centre bearing the expense of the MSP, the state’s finances are coming apart, so considerably so that it can not even commit adequate in important locations like wellness. Ironically, with its farmers continuing to develop cereals which the Centre buys at MSP, the state’s agriculture is also suffering. Agriculture GDP in Punjab grew at 5.7% per annum in 1971-72 to 1985-86 versus India’s 2.3% but, because 2005-06, agricultural development in Punjab was only 1.9 per cent per year versus 3.7% for the nation.
This is mainly because, whilst the worth of cereals output grew by just 1.6% per year amongst 2000-01 and 2018-19, horticulture grew 4.4% and dairy by 4.5% the Punjab farmer likes the certainty of his crop becoming purchased by the Centre, but the costs of other crops – like milk – are expanding considerably more rapidly. Ideally, as the report recommends, the CM should really have attempted to move about a third of the region below paddy to other crops more than 5-7 years – he could have negotiated a assistance package for this with the Centre – and, by encouraging cooperatives like Amul to the state, he could created the dairy business and also attempted to double the region below plums, peaches, litchi, guava, and so forth and vegetables like potatoes, peas, chilli and so forth that are appropriate to Punjab. Linking them to processors, organized retailers and exporters – like providing air freight subsidy for exports to the Gulf – would each lessen cost volatility and also enhance each business and jobs. When politics requires centre-stage, the economy normally suffers.