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Business News/ Politics / Policy/  Poverty grid: Punjab

Poverty grid: Punjab

Punjabwhich has an area of 3,07,713 sq. km with a population of 111 millionis the only state where the urban poverty rate exceeds the rural poverty rate

In recent years, Punjab’s economy has seen a slowdown, mainly due to stagnation in agricultural productivity. Photo: BloombergPremium
In recent years, Punjab’s economy has seen a slowdown, mainly due to stagnation in agricultural productivity. Photo: Bloomberg

Punjab has for many millennia been among the most affluent parts of this land. The Partition saw great losses and stress, both economic and social, in the Indian Punjab, but its growth continued. However, it was only after the late 1960s that Punjab truly came into its own in post-Partition India, its economy taking rapid strides with the success of the green revolution. Electricity was essential to providing irrigation through tube wells, and good roads were needed to move inputs to farms and produce out to the markets. Punjab was among the first few states to provide electricity and weather-proof roads to all its villages. Rapid agricultural growth not only made a deep dent in rural poverty but also led to the development of basic infrastructure. Consequently, its poverty rate at 8% is one of the lowest in the country.

However, the encouraging statistics of rural Punjab as seen at the aggregate level are not all rosy as we drill down at the micro level. Our spatial analysis suggests large areas with high poverty in many parts of rural Punjab. Firozpur district with 73% of the population in the rural areas has the highest poverty rate in the state. Further, granular level estimate of poverty at 1 shows high concentration of poor populations in small pockets within the district. Similarly, Tarn Taran district of Punjab, known as a rich agricultural district, has small pockets of high concentration of poor populations spread out across the entire district.

Many researchers have raised concerns over growing inequality in Punjab owing to heavy expenses involved in using advanced production methods in farming that the smaller and typically poorer farmers struggle with. Rising costs have led to the growth of landless agricultural labourers.

Given Punjab’s rural prosperity and high demand for agri-labour, one may have expected the correlation between agriculture labour and poverty to be less prevalent in this state. But close to half of Punjab’s agricultural workers are landless and our micro-level analysis shows exceedingly high proportion of agricultural labourers in areas of high poverty rates.

Unfortunately, in recent years, Punjab’s economy has seen a slowdown, mainly due to stagnation in agricultural productivity. Over the period 2004-05 to 2013-14, agricultural gross domestic product (GDP) grew by just 1% per annum, compared with the national average of 3% per annum. Poverty reduction in rural parts of Punjab calls for diversification of the agrarian economy, which the state is unable to do. Reportedly, there is growing addiction to psychotropic drugs and alcohol among Punjab’s urban and rural youth. But Punjab’s addiction to growing food grains—wheat and rice—is harming its economic future immensely. Its better educated and affluent farmers continue to find it more profitable to grow food grains than fruits, vegetables or high-value cash crops.

The over emphasis on the agricultural economy of Punjab has had another impact: the relative neglect of manufacturing. The industrial output of the state is now among the lowest in the country, and perhaps that also shows up in urban poverty. Punjab is the only state where the urban poverty rate exceeds the rural poverty rate. Ludhiana district, one of the most important contributors to the state’s economy, has an urban poverty rate of 9%, which is double the rural poverty rate of 4.5%. Similarly, in districts like Hoshiarpur, SBS Nagar, SAS Nagar and Fatehgarh Sahib, the urban poverty rate is more than double that of the rural poverty rate. A closer look at the urbanized districts of Punjab, like Ludhiana and Jalandhar, shows high degree of spatial inequality in the sense that the poor are highly concentrated in a few locations. For instance, within Ludhiana district, in about 10% of area, the poverty rate exceeds 50%, while in the rest of the district, the rate is less than 10%.

Another common facet of micro-level poverty analysis for all states in India is the dearth of economic activity in the high-poverty locations. In Punjab as well, our spatial analysis shows very few business facilities or financial institutions catering to the people’s needs in the high-poverty zones, compared with those areas where poverty rates are low.

The government’s policy initiatives call for a more focused and targeted approach to tackle poverty. This is possible through an understanding of the specific characteristics of the poor and identifying where the poor live. Our concept of spatial poverty that can be identified and measured via remote sensing allows us a far greater set of policy insights, the most important being that we are able to link poverty with the environment that gives rise to it and sustains it.

Laveesh Bhandari and Minakshi Chakraborty are economists based in New Delhi. The views of the authors are their own and not those of the organizations with which they are associated.

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Published: 19 Jan 2015, 12:46 AM IST
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