Industry and Budget

THE 2011-12 Punjab budget has given a raw deal to industry. The budget talks of the 2009 industrial policy, which was supposed to encourage IT, agro-based and food processing units. There is hardly any progress in any of these sectors. The budget has set a paltry Rs 10 crore for upgrading industrial focal points. Finance Minister Upinderjit Kaur also talks of 69 mega projects approved during the past four years. When these would become operational is anybody’s guess. The government’s rosy picture of industry has to be compared with what industrial organisations say. An Assocham study reveals that Punjab gets just 1.6 per cent of the total private and government investment made countrywide. Haryana gets double (3.8 per cent) of that.

Punjab leaders in general and finance ministers in particular like to blame the state’s poor industrial progress on its locational disadvantage as well as the Central tax incentives to the hill states. Between 2002 and 2008, Dr Upinderjit Kaur claims, 274 industrial units either moved out or set up new units in the hill states. However, Assocham attributes the slow pace of industrialisation in Punjab to corruption, administrative delays, official apathy and high land prices apart from its geographical handicap. Poor governance has led to lower tax collection and consequently fiscal deterioration. All this keeps off investors.
Also contributing to growing industrial sickness is lack of quality power. Free power to farmers has forced domestic and industrial consumers to pay more and finance the Badal government’s political largesse. Fiscal indiscipline and political and bureaucratic profligacy have almost bankrupted and incapacitated the government. The government offered no bailout to industry as global recession took its toll. There is no political will to plug revenue leakages and go after black money or mop up resources by taxing the rich, including farmers. Since agriculture is already languishing, industry alone can generate employment and push growth. A favourable policy framework, a corruption-free administration and a Gujarat-type aggressive political leadership can attract private investment and accelerate industrial growth in Punjab. The budget has missed a chance to move in this direction.