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Business News/ Opinion / Online-views/  Punjab, a state in decline

Punjab, a state in decline

Punjab, a state in decline


Decades ago, when the going was good, Punjab was the envy of the country. With the highest per capita income level and the highest growth rate among the states, there was much to be learnt from the land of five rivers. All that ended in 1979 when a separatist movement gripped the state. A decade of bloodshed followed. While peace has returned, Punjab is now one of the most malgoverned states in India.

The sacking on Wednesday of state finance minister Manpreet Badal, the only reform-minded member of the cabinet, should be seen as another negative milestone in Punjab’s journey of decline. It is an open secret that Manpreet Badal and his cousin Sukhbir Badal, the state’s deputy chief minister, cannot stand each other. Had the issue been one of a personality clash alone, the matter could have been dismissed as a small incident.

There is, however, more at stake here. Since the Shiromani Akali Dal (SAD)-led coalition government took charge in early 2007, finance minister Badal had tried hard to end ruinous policies such as free electricity for farmers and other consumers in the state, virtually free provision of various services and, in general, a populist bent in the SAD-led government.

Before 1991, Punjab’s economic model made much sense. In an autarchic economy, the single biggest supplier of foodgrains in the country could pretty much demand what it wanted from the Union government. Ever-rising minimum support prices for wheat and rice ensured a constant monetary surplus in the hands of its farmers. But once India opened up, that money looked more like rent income due to a monopolistic provider of foodgrains. Other states—Karnataka, Gujarat and Maharashtra—had much more sound and organic sources of growth. Punjab never tried to catch up.

In the absence of inventing a new economic model for itself, the least the state could do was manage its finances better. Punjab’s politics, dominated as it is by rural oligarchs, has structural barriers that prevent a turn to rational economic policies. One could say that most states have similar problems, but it acquires a different, more insidious, dimension in a high-income and erstwhile high-growth state. Manpreet Badal’s exit shows that Punjab is not even aware of the problem.

Does rational economics have any place in the rough and tumble of states’ politics? Tell us at

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Published: 14 Oct 2010, 09:01 PM IST
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