Hurdles Amarinder Singh Faces In Reviving Punjab’s Economy 

Once India’s most affluent states, Punjab is grappling with a slowing economy and a youth drug addiction problem. Agricultural output is falling in the state famously referred to as India’s grain bowl, while industries are fleeing to neighbouring states. And fiscal worries may constrain efforts to boost growth by the incoming Amarinder Singh led Congress government.

Here’s a snapshot of key economic indicators to find out how Punjab fares compared to peers and India...

Falling Farm Output Hurts Economy

In a decade, Punjab’s GDP growth slowed to half the pace, coming in at 5.96 percent in financial year 2015-2016 as the state’s agricultural output fell, according to the Central Statistics Office (CSO). From outpacing national growth Punjab fared poorly when compared to India’s GDP growth of 7.6 percent that year.

The contribution of agriculture and related activities to the state’s GDP declined from nearly 37 percent in FY04-05 to an estimated 27 percent in FY15-16, according to the state government’s economic surveys. Worsening soil health and a depleting water table are to blame, according to a January report by industry body Assocham.

Industrial growth in FY14-15 slowed to 2.55 percent, nearly one-seventh of the FY08-09 peak, said the Assocham report. Investments fell as industry shrunk. From an all-time high of 91 percent in FY07-08, new investment growth in the state contracted to 10.5 percent in FY15-16, according to the report.

Punjab is losing out to neighbouring states such as Himachal Pradesh and Haryana, said Sunil Sinha, principal economist at India Ratings. Himachal used its special status to attract the textile industry, Sinha said.

Sinha pointed out that industry suffered in the 1980s and 90s due to terrorism, forcing big companies like Bharti Enterprises Ltd. and the Hero Group to exit, adding that not many large conglomerates have returned to the state.

While Punjab’s debt has reduced over the last decade, it still ranks high on the indebted list with an estimated debt-to-GDP ratio of 31 percent in FY15-16 versus the national average of 21.2 percent. The new government may not find the space it needs to boost investment as the state’s fiscal position isn’t entirely healthy, according to Radhika Pandey, a consultant at the National Institute of Public Finance and Policy.

No Longer The Most Affluent

Punjab ranked 15th in per capita income in FY13-2014, according to CSO data. From being on top of the table in the 1980s, the state has fallen to somewhere in the middle, according to Sinha. At Rs 49,529, its per capita income at constant prices is still higher than the national average of Rs 33,000 but lower than that of six other comparable states.

Slowing Agriculture Hurts Rural Jobs

At 6 percent the unemployment rate in the state is higher than the national average of 5 percent, according to the 2011 census. The number of job seekers registered with employment exchanges in the state remained steady at 3.6 lakh between 2011 and 2014, according to a report by the National Sample Survey Organisation (NSSO).

At 17 percent in urban areas and 16.5 percent in rural areas the unemployment rate for Punjab’s youth in the age bracket of 18-29 years is among the highest in Indian states, according to the latest data by the Labour Bureau. The national average, meanwhile, is a mere 13.9 percent and 9.2 percent for urban and rural areas, respectively.

More Kids In School

Punjab’s literacy rate for seven-year-olds and above is 75.8 percent compared to the national average of 74 percent, but is worse than 20 other states, including Himachal Pradesh, Gujarat and Uttarakhand.

It was among the 10 states that saw the lowest improvement in literacy rates in the decade between 2001 and 2011, according to the census data. The state has done well in curbing dropouts in primary schools. Between 2008 and 2011, the overall dropout rate came down from 4 percent to 1.91 percent, much lower than the national average of 6.5 percent, according to CSO data.

Nursing Punjab Back To Health

Narcotic drugs or opiods worth over Rs 7,500 crore are sold in Punjab every year according to a Times of India report in January 2015 quoting a study by the National Drug Dependence Treatment Centre and All India Institute of Medical Sciences. The study pegged the number of opioid addicts in the state between 2.32 and 3.22 lakh, and added that most addicts are educated and employed. The Shiromani Akali Dal-BJP government had disputed the findings.

Punjab also has a skewed sex ratio of 895 girls for every 1,000 boys, making it among the worst 10 states in the country, according to the census data.

The state has fared better on infant mortality, which has fallen from 34 deaths per 1,000 live births every year in 2010 to 26 in 2014, according to a survey of the state’s health ministry.

Rate of preventable deaths still remains too high, especially relative to wealthier states, according to a 2014 study by Princeton University. The high rate of infant mortality among girls compared to the rest of India warrants further investigation, the study said.