In a television interview on Wednesday, Delhi chief minister Arvind Kejriwal said that industry and business houses have been fleeing Punjab and there is a need for remedial measures to revive them. While Kejriwal did not attribute any reasons for this problem, it can be assumed that he was targeting the incumbent Shiromani Akali Dal (SAD) and Bhartiya Janata Party (BJP) government.

A look at industrial growth statistics in Punjab suggests that the problem could be both systemic and political. Manufacturing growth rate in Punjab has by and large followed the national trend, except for the impressive performance in 2006-07 and 2007-08, which was a boom period generally. This boom period overlaps the period of the Congress and SAD-BJP regime. However, it is more likely that Punjab’s creditable performance during this period was more a result of overall macroeconomic factors than political reasons.

As far as Kejriwal’s charge of business flight is concerned, Annual Survey of Industry (ASI) data shows that Punjab’s trend has not been very different from the all-India figures.

As far as employment generation in industry is concerned, ASI data shows that employment growth started decelerating in Punjab even before the SAD-BJP government came to power in 2012. To be sure, ASI data would only give us a picture of organized manufacturing. However, it can be assumed that they are not drastically different from the overall trend.

While, these statistics suggest that Punjab’s record in industry has not been particularly impressive, there could be multiple reasons for Punjab’s poor performance. This report published by news website Scroll listed poor Chinese imports and proximity of other industrial centres to ports or tax-breaks in neighbouring states such as Himachal Pradesh as important reasons for the predicament Punjab’s industry has been facing. These reasons would are largely economic in nature than political. The report also mentioned higher electricity tariffs for industry in Punjab, which have become necessary to recover the costs of free electricity to the state’s farmers. In addition to the tariffs, industry is also being made to pay things like “cow cess" on power. While these are things a state government could address, whether or not populist leaders like Kejriwal can do it is an interesting question.

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