Remarkable Turn Around in Punjab Economy

Remarkable turn around in Punjab economy

PunjabNewsline.com - Remarkable turn around in Punjab economy
CHANDIGARH: The overall economy and fiscal health of Punjab showed a major upswing during the past three years, registering both recovery and resilience on all financial and growth parameters.

The state defied nationwide recessionary trends and growth slide down to emerge as one of the fastest growing economies among states. For the first time in decades, Punjab surpassed national average of growth in key areas of development and fiscal recovery, putting at rest all speculation that the state’s fiancés were a cause for worry.

This is borne out by the concrete data on growth, fiscal and revenue deficit management as well as revenue receipts and debt to GSDP ration percentages. Contrary to popular belief, the states’ industry and agriculture also registered impressive growth rate, paving the way for major economic expansion and growth in the years to come.

The state jumped from the 24th position to be among the top three in the country in rate of growth in VAT receipts. As against just 4.37 per cent in 2006-07, the rate of growth jumped to 20.46 % for 2008-09. The budgetary projections show that the figure was all set to go up to 28% during the next fiscal, a jump of nearly 700% since the SAD BJP government took over.

Similarly, plan implementation by the state reveals a a dream like success story. The five year figure for plan implementation during the Congress regime was 14, 823 crore. This figure has already been exceeded in just three years for which the figure stood at 15,379 crore. These figures significant relate to plan implementation and not just plan size.

Despite drought, recession, low MSP and unexpected hike in agricultural inputs, the state registered a growth rate of 3.42% which is more than double the national growth rate ( 1.8%) for the same period,. This figure is projected to reach 3.74% in the year 2009-10 as against the national growth rate of just 1.00 percent during the same period.
Reference:: Sikh Philosophy Network http://www.sikhphilosophy.net/business-and-lifestyle/29571-remarkable-turn-around-in-punjab-economy.html

Despite the severe handicap of package of concessions to neighboring states, industry in Punjab grew at 8.00 percent which is exactly double of the national growth rate of just 4.00 per cent. Clearly, Punjab has beaten back the global and national recessionary trends. Industry is set to grow at 8.11% during the coming fiscal.

The state’s industrial growth during the Congress regime, despite tall claims of mega projects, was below the national average by 1.65%. This time around, the same ration is 4% in favour of Punajb as against the national average.

Reference:: Sikh Philosophy Network http://www.sikhphilosophy.net/showthread.php?t=29571
Punjab also reduced the gap between the national rate of growth of economy and that of the state from minus 2.7% during the previous Congress regime ending 2007, to just minus 0.5 percent at present.

The economy grew at just 5.1% during the Amarinder regime where in the first three years of the SAD BJP government, the economy of the state achieved a healthy growth rate of 6.7 percent. Here also, the state closed down the gap between the national average from minus 2.7% to just minus 0.3 %.

The state government also turned the corner in the matter or revenue receipts including state taxes, jumping form a meager 031% during the Amarinder regime to an incredible 12.4% in the first three years alone. And this figure is like to go astronomically up to touch 24% at the end of 2009-10 fiscal, increase by an unbelievable 72 times.

The state was also able to substantially reduce its fiscal deficit from 4.22% in 2007 to 4.03 % pr cent and the revised estimates show the figure would go further down to just 3.41% in the 2009-10 fiscal.

Similarly, revenue deficit as percentage of GSDP, which stood at 4.1% during the fiscal 2007-8 has been brought down to 2.1 %, and is likely go down even further during the nest fiscal year.

Another important parameter concerning the ratio of debt to Gross State Domestic Product (GSDP) also showed a major improvement. This ratio stood at 39.89 percent at the end of the Congress regime in 2007. It has now been brought down to 34.85% and is likely to go down further to 33.75 % in the next fiscal.

 
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Very many thanks for posting the above article.
The following are the figures that are indicative of the economic development of India.These are taken from the Government of India's site.May be it is of some use who want to invest in India.

Indian Economy: Highlights –January 2010
Industrial Production
The data on the industrial production shows initial indications of improvement. The overall index of industrial production after registering a growth of 10.3 percent in October 2009 witnessed an even higher growth of 11.7 percent in November 2009.
Further the classifications of the industrial production shows the manufacturing and mining sectors register growths of 12.7 percent and 10.0 percent respectively in November 2009. Growth in the electricity sector was also seen to grow by 3.3 percent compared to the growth recorded in the previous year.
Core Infrastructure
The overall index of six core infrastructure industries registered a growth of 6.0 percent in December 2009, which was 5.3 percentage higher than the growth recorded in the same month of previous year. The crude oil production after registering negative growth for five consecutive months, witnessed a growth of 1.1 percent in December 09. Once again cement and finished steel segments were best performers, with respective growths of 11.0 percent and 9.6 percent. The coal and petroleum sectors remained laggards. The growth in coal production was 2.5 percent in December 09 much lower than the growth of 11.2 percent in the same month of previous year. Similarly petroleum refinery segment registered 0.9 percent growth in December 2009 as against a high growth of 3.0 percent recorded in corresponding month of 08.
Reference:: Sikh Philosophy Network http://www.sikhphilosophy.net/showthread.php?t=29571
Inflation
The skyrocketing food prices resulted into flaring of overall inflation, this continues to be a major concern. The rate of inflation increased by almost 2 percentage, from 5.5 percent in November 09 to 7.3 percent in December 09. This was also higher than the inflation rate of 6.2 percent recorded in December 2008.
In December 2009 the inflation rate for three broad segments – primary articles, fuel lubricants and light and manufactured products was 14.9 percent, 4.3 percent and 5.2 percent respectively.
Monetary Indicators
The broad money supply expanded by 10.9 percent during the April-December period of 2009-10. The corresponding growth during the previous fiscal was 12.4 percent.
The aggregate deposits increased by 9.8 percent during April-December period of 2009-10. The growth during the first three quarters of 2008-09 was 11.7 percent. (calculated from March end upto the December)
The bank credit went by 7.0 percent over the period April to December 2009-10, while the growth in corresponding period of the last fiscal was 12.1 percent.
Stock Market Trends
High investment activity was seen in the stock market after the economic fundamentals gained strength. The stock market remained bullish in the month of December 09 with BSE Sensex closing at over 17k points by month end.
Fiscal Trends
The gross tax revenue collections during the period April-December 2009-10 amounted to Rs 4, 16, 094 crore a drop by 2.5 percent from Rs 4, 26,795 crore revenue collections over the same period last fiscal.
While income from the direct sources of tax revenue, i.e. income and corporate tax increased however, collections from indirect sources witnessed a fall. Over the period, April-December 2009-10 the growth in revenue from income tax was 12.2 percent and in case of corporate tax it was 16.8 percent. Growth in the custom duty, excise duty and service tax collections, on the other hand, was negative 29.2 percent, (-) 18.2 percent and (-) 5.9 percent respectively.
The revenue receipts of the government witnessed a marginal increase, from Rs 3, 75,937 crore in April-December 2008-09 to Rs 3, 89,271 crore during the same period this financial year. With an additional expenditure of Rs 1,10, 324 crore during the period April-December 2009-10 vis-à-vis same period last year, the total expenditure saw an increase of 18.5 percent. The resultant fiscal deficit over the corresponding period was Rs 3, 09, 980 crore.
Foreign Trade
The growth in the merchandise exports sector turned positive in November 2009 after a thirteen-month period of decline. The growth recoded in December 2009 was relatively lower than the growth seen in the previous month. In December 2009 the exports registered a growth of 9.3 percent, as against the growth of 18.2 percent registered in November 2009.
The imports also registered a positive growth after being in the negative territory for straight eleven months of 2009 since January . The imports grew by 27.2 percent in December 2009. Oil imports grew by 42.8 percent, while non-oil imports increased by 22.4 percent.
Foreign Investments
Foreign direct investment of USD 1.7 billion was received in November 2009 as against the inflows of USD 2.3 billion in the previous month. There was a decline in the portfolio investments as well in November 09 vis-à-vis inflows in the previous month. The cumulative investment inflows over the period April-November 2009-10 amounted to USD 47.1 billion.
Foreign Exchange Reserves
The forex reserves accumulated in November 2009 was USD 286.7 billion. Last year the reserves had fallen to USD 247.6 billion in the same month.
Exchange Rate
The rupee witnessed slight appreciation in the month of January 2010 vis-à-vis the USD. The Rupee Dollar exchange rate which averaged Rs 46.6/USD in the month of December 2009 was at Rs 45.9/USD in January 2010.

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General Observation and in context of Punjab
Taranjeet singh
1.Strengtheing of Indian Rupees

During the year the Rupee has strengthened thus affecting the exporters. However, the effect on The economy of Punjab would be minimal as the export oriented Industrial units in Punjab are only a few and their contribution to the overall economy is almost nil. The effect would be felt directly by the industries engaged in software exports to Us and Europe. The software giants have made the base in Banglore.Punjab has only small and medium enterprises but the percentage contribution is almost insignificant

2.Poor receipt of FDI in Punjab due to Government Policy

The Foreign Direct Investment receipts for Punjab are also nil ,insofar, as the Institutional investors are concerned. Yes, there may be inflow of Dollars on account of the assistance sanctioned by the World Bank for the rural infrastructural development.
Reference:: Sikh Philosophy Network http://www.sikhphilosophy.net/showthread.php?t=29571

3.Industrial Production is poor in Punjab

Punjab has been dependent on Agriculture. Its 75 percent population is engaged in Agriculture or agri-related business. Due to the apathy of the Central government and non-follow up by the state Government no major Licences are routed to this state. This state of affairs shall continue unless there is a dramatic change in the Centers Policy towards Punjab. The major Industrial financing was done by Punjab state industrial Corporation, a development Bank of Punjab Government, was at the verge of closure on account of NPAs and huge backlog of the dues of the arrears of loans sanctioned by it. There is absence of any thrust given to the Private sector through PPP route.

Punjab has base of traditional industries like cycles,agri -related business, textile and tourism ,the revenue of which is on decline .It does not have any major industry.
PPP route is fairly in vogue in India. But Punjab has got step motherly treatment.It can be accounted for the reasons that are well known and are not spelled out here.

4.Core Infrastructure absent in Punjab

Out of the six core industries, the contribution of Punjab is almost nil.

It would be apparent that Punjab has to rope in big Industrial houses so that it can also be called as Industrial state. It is a subjective analysis.

It is good to have the complete picture including the picture from greater India which is the context for understanding Punjab's economy in the larger sense.