PUNJAB is considered to be the number one state in the infrastructure index prepared by several agencies. The state is supposed to have all its towns connected with national highways, villages with state highways, 100 per cent electrification of rural and urban areas and clean and potable drinking water for all.
There are several departments, boards and corporations for facilitating housing, roads, bridges, water and sewerage and a nodal agency for infrastructure. It is called the Punjab Infrastructure Development Board. Punjab has also enacted the Punjab Infrastructure (Development and Regulation) Act, 2002.
However, the ground reality is that one of the most important components of infrastructure, power, is woefully inadequate and unreliable. Also, the state suffers from the shortage of all types of basic and sector-specific infrastructure. There is an extreme shortage of storage space for foodgrains, rural roads were washed away during rains/floods many years ago and the delivery of basic urban services leaves a lot to be desired.
Impact of militancy
The state created a well laid-out canal irrigation system for agricultural development and also set up schools, hospitals, roads and bridges during the 1960s and 1970s. Punjab was at its glorious best till the menace of civil strife hit the state. The attention of the state administration as also the resources including manpower and finances were used up to curb the growing threat of insurgency in the 1980s. It was only in the early 1990s that a popular government was, once again, installed in the state, but by then the well developed social overhead capital in Punjab had started withering away. The then government tried to gain a grip on the development of Punjab but the pace of growth of the state economy had slowed down by then.
However, in the second decade of the twenty-first century we cannot continue to shift the blame of poor civic amenities in Punjab either on militancy in the State or the neglect by the Government of India. All of us are aware and must acknowledge that the major reason for this has been a deterioration in state finances and an extremely fragile fiscal health of the state.
The setting up of new departments, boards and corporations for infrastructure development alone is not enough, rather it is an additional burden on the state exchequer in terms of administrative expenses. There are many government departments as well as boards and corporations carrying out similar activities and increasing non-plan expenditure of the government. It is the quality of state expenditure that reflects the seriousness of the government towards the maintenance and creation of modern infrastructure and delivery of basic services in the state. If we look at the pattern of expenditure over the recent past, the development expenditure, i.e., expenditure on social and economic services was more than 48 percent of the total expenditure in 2006-07 and decreased to nearly 45 percent in 2010-11, which is 64.42 percent for other general category states on an average. Similarly, the capital expenditure which was nearly 12 percent of the total expenditure decreased to only 6.74 percent in 2010-11 and the average for the general category states was more than 13 percent. If we further compare the ratio of expenditure on social and economic services with other states, again Punjab lags behind. This reflects that Punjab accords much lower priority to development expenditure, including expenditure on education and health. Capital expenditure increases the asset creation which, in turn, generates opportunities for higher growth. This expenditure is also inadequate in Punjab as compared to other states. The share of salaries and wages in revenue expenditure on social services in the State is more than two-thirds of the total expenditure on this head. This shows that not only the capital expenditure is inadequate but is also not efficient as a very low proportion is used for the creation and maintenance of assets in the State.
Civic bodies fund-starved
Many civic services are provided by local bodies to citizens for which the state governments allocate funds according to the recommendations of the State Finance Commissions. The Government of Punjab has not been releasing the funds to Urban Local Bodies (ULBs) and Panchayati Raj Institutions (PRIs) as recommended by the State Finance Commissions. Consequently, funds available to ULBs and PRIs are inadequate and the delivery of public health services suffers to that extent. Also, the abolition of octroi as a populist measure in the State has reduced funds at the disposal of local bodies. The funds meant for the improvement of rural roads and other rural infrastructure collected by way of mandi fee and other extra-budgetary sources are not used for maintaining rural infrastructure. The state government squarely blames the Centre for the woeful inadequacy of storage space during the procurement of foodgrains in the state. The canal system in the state needs urgent maintenance as the damaged canals are leading to a colossal wastage of precious water and several other related problems in the rural areas.
Power is the worst performing sector in Punjab. There is lack of power for households, agriculture and industrial purposes. The state is unable to generate enough power and is compelled to buy expensive electricity from outside. Punjab State Power Corporation Ltd accounts for 92 percent of the losses of state public enterprises, which amount to Rs. 8,411.23 crore. This situation is, once again, created by populist policies of the state government which is reflected in a grim financial health of Punjab. In the run-up to the elections there were promises galore of making Punjab a power surplus state but it does not appear that even the basic needs of the citizens can be met with the quality and quantity of power available in the state at present. The state transport sector is in a shambles as both Punjab Roadways and Pepsu Road Transport Corporation are running into losses. All this has led to a flight of capital from Punjab as industry is attracted only to regions where there is seamless delivery of infrastructure and an enabling environment for setting up business. Both are lacking in Punjab.
Dismal use of Central funds
The Government of India allocates funds to the state governments under various schemes for providing social and physical overhead capital. The record of the Punjab government in the utilization of such funds is dismal. The funds have been given to the state for urban transport, programmes for providing general and public health facilities as well as for educational institutions, etc. but the utilization rate has been about one-third. Since the further allocation of these funds is tied to their effective utilization, these are not allocated in the next year. Therefore, Punjab is not only lagging behind in basic infrastructure creation and maintenance out of its own funds but also does not take advantage of central funding for social and economic overhead capital.
The Public Private Partnership (PPP) model in Punjab has resulted in setting up of only one worthwhile mega-project: HPCL- Mittal refinery at Bathinda. All the other PPP initiatives in the state are in the education sector, roads, etc. There is no regulation of the quality of education imparted by the mushrooming technical and management institutes. There is a haphazard growth of the real estate sector in Punjab in the name of creating housing infrastructure and shopping malls. The promised international airports at Chandigarh and Ludhiana have not yet taken off.
Improve connectivity
What is really needed in the state has to be prioritised. The most pressing need is for adequate power, the upgrade and repair of irrigation facilities , good quality roads, air links with major national and international destinations, quality health and education, besides water supply, sanitation and public health facilities in urban and rural areas. The state government must stop being self-congratulatory over likely development in future and be realistic in admitting its failure to provide this so-called developed state any world-class infrastructure project. Unless we admit the inadequacy, we cannot be expected to create any good infrastructure. The rate of growth of Punjab can, once again, be augmented if the gap in social and economic overhead services in the state is bridged by a sincere effort on the part of the government.
The present government has been given another chance to prove itself and pursue the development agenda for the state – the slogan on which they won the state elections and not merely use it once again to fight the next general election. People are waiting to see the revival of the economy, which cannot take place unless the slogans are translated into concrete actions. Punjab must be made a desirable destination for both domestic and foreign investment in the secondary and tertiary sectors and its agricultural deceleration must be arrested. All this is possible if efficient and adequate public investment is made in infrastructure, besides a clean and investor friendly environment
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