Manmohan Singh asked the states to consider waiving mandi and some other local taxes for taming inflation which affects poor harder and poses serious threat to the growth momentum. As such steps would affect the ruling partners vote banks and will hit the shaky state finances, Punjab’s Akali-BJP government has been resisting such measures in the past and is also not likely to take them when hardly a year is left in its term to end. This is despite the fact that the state’s economy is on the verge of collapse notwithstanding the official claims of increase in the tax revenues.

The graveness of Punjab’s economic health cannot be fully gauged without recalling, even at the cost of repetition, its economy’s current miserable state which has adversely affected the state’s growth momentum and hurt the common man. But first a brief mention of some vital statistics of the state economy.

Once the highest gross state domestic product state, Punjab has slid to the fourth position from the bottom in the last few years with its 2008-2009 GSDP touching 5.37 percent. The low growth figure has been contested by Deputy Chief Minister Sukhbir Singh Badal who quoted the latest official growth estimates of over eight per cent which, he said were more than the national average. But the claim loses its credibility when challenged that Punjab’s reworked higher growth rate is based on the upside revision of the base year. Had the same criterion were applied for other laggard states, the claim of Punjab’s higher GSDP would fall flat.

Almost all the preceding governments have been responsible for the present poor state of Punjab’s financial health but the decline has been sharp during the four years of the present Akali-BJP government. The state has been getting increasingly burdened with debt which will cross Rs.70,000 crore this year. The government is borrowing to pay its committed expenditure including employees salaries. Their pay Commission dues remain unpaid. Payment of pensions, shagun scheme claims and old-age and widow pensions remain unpaid for along periods. Under verbal instructions, the treasuries suspend payment of bills and grants to the privately managed schools leading to extraordinary delay in the payment of their teachers salaries. Demonstrations and protests are held almost daily in support of their demands by different sections of the employees. They have to face police lathis.

While the state government is justified in demanding increased share in central funds allocation, its claim gets weakened by the fact that it fails to utilize large amounts of funds provided by the Centre for specified schemes. The latest instance is the diversion of money meant for the construction of toilets for Scheduled castes to the general category beneficiaries in order to favour the political masters. The state government has also failed to take steps like mobilization of additional resources and gradual scaling down of subsidies as suggested by the centre for waiving of nearly half of the state’s huge debt. All this has happened at the cost of education, health and social welfare.

The state government has refused to gradually curtail power subsidy for the farm sector arguing that high input costs and “unremunerative” prices of the produce necessitates grant of such a relief. The government’s argument is valid so far as small and marginal farmers are considered who produce small surpluses and whose share in use of free power is relatively much smaller. On the other hand, rich and large farmers who include most of the ruling class are the main beneficiaries of the power subsidy as they produce large surpluses and enjoy other official largesse.

When the Prime Minister said that corruption strikes at the roots of good governance he was obviously speaking from his experience of six years of Prime Ministership. The situation in the states is no different. Though corruption in Punjab is not on the scale as it is in some states, particularly UP where Mayawati and her predecessor Mulayam Singh Yadav have amassed huge wealth, yet Punjab’s politically powerful Akali and Congress families have been tainted with corruption and disproportionate assets charges.

What, however, is worse is the despicable form the menace has taken in the state. Official machinery is misused by the rulers and their kin to amass wealth and monopolising businesses at the cost of the established and entrepreneur competitors. When these rulers lose power, their successors order investigation into corruption charges against them resulting in registration of corruption and disproportionate assets cases against them by the State Vigilance Bureau. But when those facing such cases recapture power the same Vigilance Bureau which had registered cases against them join hands with the Defence, instead of acting as prosecutors, to get the accused exonerated from courts.

These are among the main factors which are responsible for the present miserable state of governance in Punjab.

The above scenario raises the question: Can Punjab’s economy, now virtually on the death-bed, be resurrected, much less restored, to its old glory? Not, at least, in the foreseeable future. Instead, there is every chance of its further sliding. During the pre-election periods the governments normally become ‘generous’ in spending public funds on providing freebies and for long-forgotten and unviable plans for ruling party’s electoral benefit. Like many other governments, Punjab’s Akali-BJP government is also treading such a path. The consequences of its “generosity” will have to be borne by the new government that comes to power after the 2012 Assembly elections. (IPA Service)