Why Punjab deserves a special package and special status

AT the May 24 meeting of NITI Aayog, Punjab Chief Minister Bhagwant Mann sought a special grant of Rs 2,829 crore to tackle the drug trafficking problem and strengthen border security. Both the issues have intrinsic merit for the state as well as the country. The state shares a 553-km-long international border with Pakistan. It has always been a sensitive border and a concern for the national security. Punjab is also a transit route of trans-border drug smuggling from the Crescent Triangle. The Government of Punjab is in the thick of a battle — christened ‘Yudh Nashiyan Virudh’ — against the drug menace. Governor Gulab Chand Kataria led a march against the menace from April 3-8.

Special status must be granted to the border districts and sub-mountainous region to accelerate the development of these areas.

Notably, the geographical area of all six border districts of Pathankot, Gurdaspur, Amritsar, Tarn Taran, Ferozepur and Fazilka is 13,963 square km, which is 27.73 per cent of the total area of Punjab (50,362 square km). In view of Punjab’s strategic geopolitical location, the Union government has already deployed Central security forces, covering 50 km depth from the international border. This constitutes 54.90 per cent (27,650 square km) of the state’s total area. Thus, the operational area of the Central forces extends much beyond the border districts and this ‘newly designated border area’ may be treated as a border belt for all intents and purposes.

As per the Punjab Economic Survey 2023-24, the average per capita income (PCI) — Net State Domestic Product at 2011-12 prices — of the six border districts increased from Rs 70,503 in 2011-12 to Rs 91,347 in 2020-21. Comparatively, the average PCI of the remaining 16 districts rose from Rs 90,753 in 2011-12 to Rs 1,19,833 in 2020-21. The average PCI of the border districts increased by 29.56 per cent while that of the other districts increased by 32.04 per cent. The average PCI of the border districts was 77.16 per cent of the non-border districts in 2011-12. It declined to 76.23 per cent in 2020-21.

Thus, the PCI gap between the border and non-border districts widened during this period. Significantly, the international border has always been a constraint in realising the latent potential of socioeconomic development of Punjab in general and that of the border districts in particular.

The sub-mountainous (Kandi area) districts of Pathankot, Hoshiarpur and Rupnagar also have their own specific constraints over development. As per the 2011 population Census, the six border districts account for 28.61 per cent (79,37,680 persons) of the total population of the state. Barring Pathankot and Amritsar, all other districts have a much higher proportion of rural population (between 72 per cent and 87 per cent) than state’s average of 62.52 per cent.

Significantly, with just 1.53 per cent of India’s geographical area, Punjab has been the vanguard of meeting the country’s food security ever since the advent of Green Revolution in the mid-1960s. It contributed 73 per cent wheat and 45.3 per cent rice to the Central pool in 1980-81. Though the respective shares declined to 35.46 per cent and 25.53 per cent by 2018-19, the state is still contributing a very high proportion to the Central pool.

Paradoxically, 80 per cent of the water used by paddy in Punjab is virtually consumed by its contribution of rice to the Central pool. In the process, Punjab has suffered a lot in terms of groundwater, soil health and environment. Its water table is going down at an alarming rate, with nearly 80 per cent of the development blocks being already overexploited. As per the estimates by the Central Ground Water Board, Punjab will face a serious water shortage in another 15-20 years.

In terms of the annual average growth rate, Punjab has been lagging behind the national average since 1992-93. Prior to that, since 1970-71, its growth rate had been higher than the national rate. This is mainly owing to serious investment-deficiency (very low investment-GSDP ratio as compared to the national average and many well-performing states) since 1994-95.

In terms of per capita income, Punjab was a top-ranking state from 1970-71 to 1994-95, but it started to slide after that. Amongst the 18 major states of India, Punjab ranked 10th in 2022-23. According to NITI Aayog’s recent report, Punjab stands at the 18th position among the 18 major states in terms of the fiscal health index (FHI) during 2014-15 and 2021-22.

The ever-increasing outstanding public debt in Punjab is another serious constraint in its development. Currently, it stands at

Rs 3,82,935 crore (47.30 per cent of the GSDP — the highest ratio among the major states). Debt is hovering around 350 per cent of the state’s total revenue receipts (TRR). Debt service is consuming approximately 41 per cent of the state’s TRR. Another 23 per cent goes to power subsidy. The competitive political populism, unjudicial financial management and below-potential mobilisation of financial resources are adding fuel to the fire.

In view of the above, Punjab needs not only a special package but also a special status. A special package is needed to address the drug menace, deteriorating soil and environmental health, depleting water table, the unsustainable debt burden and investment deficiency and the low-growth syndrome.

Special status must be granted to the border districts and the sub-mountainous region to accelerate the development of these areas. The Punjab government and all political parties must join hands to persuade the Centre to give the state a special package as well as special status. The Union government, too, must be more considerate towards bailing out Punjab as it would eventually be in the larger national interest.

Nonetheless, Punjab must also set its house in order with a clear focus on the realisation of the latent potential of financial resources and their judicious use so as to put the state on the fast track of socioeconomic development and address the fundamental problems that it is facing.

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