The much-acclaimed growth model of Punjab was essentially a single sector project. Its epicentre was the national programme of agriculture development for making the country self-sufficient in food grains. The state government enthusiastically participated in making the national programme a success. In the process the state and the farming community both became prosperous. Unfortunately, since the mid-1960s neither the Centre nor the state have given a thought to the basic issue: After agriculture, what?
The implicit assumption was perhaps that agriculture would be a perennial source of growth. Agriculture is limited by the physical environment, a shrinking export base and its inability to absorb an expanding labour force. Therefore, as the economy grows, the share of agriculture both in income and employment declines. Unfortunately, it did not happen adequately in Punjab. We at present have a very disturbing sectoral combination comprising a deteriorating agriculture and a very weak industrial base.
For sustainable development the state's New Industrial Policy should encourage industries having locational advantages such as agro-based, footloose and knowledge-based industries
The state exports its food grains, and in return, imports most of agro-based industrial products from other states. For example, the branded products of wheat, rice, cotton and juices are imported by Punjab from other states. The state, therefore, should encourage the processing of agricultural produce. This will generate employment, mitigate the problem of safe storage of food grains and raise revenue through the value added tax (VAT) on finished products.
Agriculture uses inputs like chemical fertilisers, pesticides, machinery — tractors, diesel engines, harvest combines, implements and irrigation pumps. Most of these are imported from other states. The government, therefore, should encourage industries which supply inputs to the agriculture sector. Some of the agricultural inputs, machinery and implements are produced in the state, but the scale of production is very low. Further, the state does not have testing facilities for agriculture machinery and implements. The existing units have to send implements for testing outside the state. The state, therefore, must have machinery and implements testing laboratory facilities.
Thus, we have two types of ago-based industries: Those that use agricultural produce as raw material and those that supply inputs to the agricultural and allied sectors.
This can be done by setting up footloose and knowledge-based industries in the state. Footloose industries are those which use very light weight raw material, require less land, involve low transport cost, make high value addition and employ skilled manpower. These industries are normally non-polluting and can be located near residential areas.
Punjab has many locational advantages for these industries. The state should prepare a time-bound roadmap for developing these industries. These will yield manifold dividends to the state. Along with industrialisation these will also solve the problem of unemployment, will not encroach much upon fertile land and also would not pose a threat to the environmental resources.
Knowledge-based industries are essentially those in which the generation, management and application of knowledge is the core activity. These employ highly skilled manpower which is actively engaged in R & D activities. Developing new technologies, processes, patents, intellectual property rights and management of knowledge are some of the outcomes of knowledge-based industries.
The potential for knowledge industries in Punjab is high as the state has a large number of engineering, medical, pharmaceutical, management and law colleges and universities. Knowledge-based industries work very closely with educational institutions. Thus, these industries should be located near universities, research centres, engineering and medical colleges. In Punjab the contiguous belt between Zirakpur and Patiala, the area around Chandigarh and SAS Nagar are most suitable for the development of knowledge-based industries as these areas have a high concentration of educational institutions.
Footloose and knowledge-based industries should be the major thrust of the New Industrial Policy. For this to happen the state should encourage the educated unemployed youth to form cooperatives for setting up industries. They should be trained in ITIs, polytechnics, engineering. medical, pharmaceutical, management and law colleges for entering areas such as registering patents, financial management, marketing management, record keeping and net working . The lending institutions and government agencies should join hands to provide loans and subsidies to co-operatives of young entrepreneurs by following simple, time-bound and transparent procedures.
Punjab has predominantly small units. In the era of liberalisation and globalisation these units have been marginalized as the market is swamped with products coming from large units in other states or abroad. For example, cheap Chinese products are posing a big threat to small-scale units in the state.
For overcoming the problem of marketing, the state should develop an integrated model of industrialisation. Under this model, small industries act as ancillary units, supplying semi-processed inputs or parts to large or parent units. Their products, after final touches, are marketed by large units, which also provide cutting-edge technology, skill development, finances, etc. This model is successfully used in Japan.
Punjab is a land-locked state and is away from big national markets. For overcoming market constraints, an improvement in Indo- Pak trade holds the key. All political parties of the state should join hands and meet as a delegation to the Prime Minister for using his goodwill with his Pakistani counterpart for opening new avenues of Indo-Pak trade through the land-route. In case both India and Pakistan agree to promote trade through the land route on a larger scale, Punjab's industry, including in the border districts, would emerge as the principal gainer.
The writer is an economist and Dean, Faculty of Arts, Panjab University, Chandigarh
n Inadequate availability of power
n Shortage of skilled manpower; and
n Cumbersome and time-consuming process of getting clearances for change in land use
n Uninterrupted power supply
n Direct industry- ITI linkages
n Cut the red tape
n Strengthen agriculture-industry linkages for growth in ago-processing, dairying and textiles; and
n Establish industrial clusters along the dedicated rail freight corridor.
n Wheat crop-based industries: Floor mills, porridge, bakery units, pasta, semolina, noodles, macaroni, glucose, syrup, vermicelli, dextrose, beer, wine, cattle feed;
n Paddy crop based industries: rice shellers, noodles, rice bran oil, rice husk, rice glue, beer, wine;
n Paper industry based on wheat husk and rice straw;
n Cotton crop based industries: Cotton processing, textile, rugs, cushions, mattresses, surgical cotton, oil, cattle feed;
n Canned vegetables industries;
n Juice processing units;
n Biomass-based power generation units;
n Milk-based industries;
n Livestock-based industries: meat and meat products, leather and leather products
n Chemical fertilizers industry
n Pesticides and other chemical manufacturing units
n Units producing agricultural machinery, including tractors, threshers, combine harvesters
n Agricultural implements making units, including automatic disc plough, seed-cum-fertilizer drill, cultivator, paddy harrow, rotary tiller, land leveller, chaff cutter, reaper, ridger, offset disc harrow, and bund maker
n Electric motors
n Diesel engines
n PVC pipes
(i) Electronics; (ii) Computers and peripherals, software development (iii) semi-conductors (iv) Telecommunication and information technology (v) Pharmaceuticals (vi) Biotechnology (vii) Surgical and medical instruments; (viii) Optical instruments and lenses (ix) Engineering and scientific equipment (x) Consultancy services for insurance, share market, financial matters, real estate (xi) Career counselling, guidance and job/placement services (xii) International business, immigration and study abroad services; (xiii) tourism (xiv) Hotel management and catering services; and (xv) Event management services.
The implicit assumption was perhaps that agriculture would be a perennial source of growth. Agriculture is limited by the physical environment, a shrinking export base and its inability to absorb an expanding labour force. Therefore, as the economy grows, the share of agriculture both in income and employment declines. Unfortunately, it did not happen adequately in Punjab. We at present have a very disturbing sectoral combination comprising a deteriorating agriculture and a very weak industrial base.
For sustainable development the state's New Industrial Policy should encourage industries having locational advantages such as agro-based, footloose and knowledge-based industries
Agro-based industries
At present wheat, paddy and cotton are three principal crops. In Punjab the lion's share of production of these crops is exported to other states. In 2009-10, out of total wheat arrivals of 110 lakh tonnes the state contributed 107 lakh tonnes to the Central pool which was 97 per cent of the total market arrivals. In other words, almost the entire wheat procured in the state is exported in raw form. Similarly, 65 per cent of the total paddy arrivals in the market is exported to other states. The case of cotton is no different. The state exports its food grains, and in return, imports most of agro-based industrial products from other states. For example, the branded products of wheat, rice, cotton and juices are imported by Punjab from other states. The state, therefore, should encourage the processing of agricultural produce. This will generate employment, mitigate the problem of safe storage of food grains and raise revenue through the value added tax (VAT) on finished products.
Agriculture uses inputs like chemical fertilisers, pesticides, machinery — tractors, diesel engines, harvest combines, implements and irrigation pumps. Most of these are imported from other states. The government, therefore, should encourage industries which supply inputs to the agriculture sector. Some of the agricultural inputs, machinery and implements are produced in the state, but the scale of production is very low. Further, the state does not have testing facilities for agriculture machinery and implements. The existing units have to send implements for testing outside the state. The state, therefore, must have machinery and implements testing laboratory facilities.
Thus, we have two types of ago-based industries: Those that use agricultural produce as raw material and those that supply inputs to the agricultural and allied sectors.
Footloose industries
Punjab has around 10 lakh unemployed youth. A large number of them are technically trained. In 2009-10 Punjab had 45,723 professionally qualified, technical and related workers on the live registers of the employment exchanges in the state. As these exchanges are not very effective in helping the unemployed to get suitable jobs, the actual number of technically trained professionals in search of jobs must be higher. The need of the hour is to exploit this goldmine. This can be done by setting up footloose and knowledge-based industries in the state. Footloose industries are those which use very light weight raw material, require less land, involve low transport cost, make high value addition and employ skilled manpower. These industries are normally non-polluting and can be located near residential areas.
Punjab has many locational advantages for these industries. The state should prepare a time-bound roadmap for developing these industries. These will yield manifold dividends to the state. Along with industrialisation these will also solve the problem of unemployment, will not encroach much upon fertile land and also would not pose a threat to the environmental resources.
Knowledge-based industries are essentially those in which the generation, management and application of knowledge is the core activity. These employ highly skilled manpower which is actively engaged in R & D activities. Developing new technologies, processes, patents, intellectual property rights and management of knowledge are some of the outcomes of knowledge-based industries.
The potential for knowledge industries in Punjab is high as the state has a large number of engineering, medical, pharmaceutical, management and law colleges and universities. Knowledge-based industries work very closely with educational institutions. Thus, these industries should be located near universities, research centres, engineering and medical colleges. In Punjab the contiguous belt between Zirakpur and Patiala, the area around Chandigarh and SAS Nagar are most suitable for the development of knowledge-based industries as these areas have a high concentration of educational institutions.
Footloose and knowledge-based industries should be the major thrust of the New Industrial Policy. For this to happen the state should encourage the educated unemployed youth to form cooperatives for setting up industries. They should be trained in ITIs, polytechnics, engineering. medical, pharmaceutical, management and law colleges for entering areas such as registering patents, financial management, marketing management, record keeping and net working . The lending institutions and government agencies should join hands to provide loans and subsidies to co-operatives of young entrepreneurs by following simple, time-bound and transparent procedures.
Punjab has predominantly small units. In the era of liberalisation and globalisation these units have been marginalized as the market is swamped with products coming from large units in other states or abroad. For example, cheap Chinese products are posing a big threat to small-scale units in the state.
For overcoming the problem of marketing, the state should develop an integrated model of industrialisation. Under this model, small industries act as ancillary units, supplying semi-processed inputs or parts to large or parent units. Their products, after final touches, are marketed by large units, which also provide cutting-edge technology, skill development, finances, etc. This model is successfully used in Japan.
Punjab is a land-locked state and is away from big national markets. For overcoming market constraints, an improvement in Indo- Pak trade holds the key. All political parties of the state should join hands and meet as a delegation to the Prime Minister for using his goodwill with his Pakistani counterpart for opening new avenues of Indo-Pak trade through the land-route. In case both India and Pakistan agree to promote trade through the land route on a larger scale, Punjab's industry, including in the border districts, would emerge as the principal gainer.
The writer is an economist and Dean, Faculty of Arts, Panjab University, Chandigarh
Reasons for slow industrial growth
n Costly land n Inadequate availability of power
n Shortage of skilled manpower; and
n Cumbersome and time-consuming process of getting clearances for change in land use
Remedial measures
n Set up multiple product special economic zones n Uninterrupted power supply
n Direct industry- ITI linkages
n Cut the red tape
n Strengthen agriculture-industry linkages for growth in ago-processing, dairying and textiles; and
n Establish industrial clusters along the dedicated rail freight corridor.
Industrial policy
Punjab's new industrial policy must specifically promote the following agro-based industries: n Wheat crop-based industries: Floor mills, porridge, bakery units, pasta, semolina, noodles, macaroni, glucose, syrup, vermicelli, dextrose, beer, wine, cattle feed;
n Paddy crop based industries: rice shellers, noodles, rice bran oil, rice husk, rice glue, beer, wine;
n Paper industry based on wheat husk and rice straw;
n Cotton crop based industries: Cotton processing, textile, rugs, cushions, mattresses, surgical cotton, oil, cattle feed;
n Canned vegetables industries;
n Juice processing units;
n Biomass-based power generation units;
n Milk-based industries;
n Livestock-based industries: meat and meat products, leather and leather products
n Chemical fertilizers industry
n Pesticides and other chemical manufacturing units
n Units producing agricultural machinery, including tractors, threshers, combine harvesters
n Agricultural implements making units, including automatic disc plough, seed-cum-fertilizer drill, cultivator, paddy harrow, rotary tiller, land leveller, chaff cutter, reaper, ridger, offset disc harrow, and bund maker
n Electric motors
n Diesel engines
n PVC pipes
Knowledge-based industries 
Given the availability of highly skilled manpower, limited land and scope for value addition, the following types of footloose / knowledge-based institutions are recommended in Punjab: (i) Electronics; (ii) Computers and peripherals, software development (iii) semi-conductors (iv) Telecommunication and information technology (v) Pharmaceuticals (vi) Biotechnology (vii) Surgical and medical instruments; (viii) Optical instruments and lenses (ix) Engineering and scientific equipment (x) Consultancy services for insurance, share market, financial matters, real estate (xi) Career counselling, guidance and job/placement services (xii) International business, immigration and study abroad services; (xiii) tourism (xiv) Hotel management and catering services; and (xv) Event management services.
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