- Due to a constantly increasing freebie culture, Punjab has piled up a truckload of debt
- Due to decreasing youth productivity, Punjab is not in a condition to pay off its debt in the nearest future
- Punjab is slowly turning into a BIMARU state
If you watch Bollywood movies, Punjab must strike you as a state full of high end expensive cars. However, nothing could be farther from the truth. Punjab whose youth is infamous for drugs consumption is into rabbit hole. It is neck deep under debt as well.
Kejriwal’s freebie announcement
Freebie culture has never done any good to anybody or any institution for that matter. It has taken its toll on Punjab as well. Successive governments had left no stone unturned in destroying the entrepreneurship engrained among Punjabis. In fact, they made them so much dependent on their doles that most of the population is hit by stockholm syndrome and are now vouching for more freebies.
This is where Arvind Kejriwal led Aam Aadmi Party (AAP) pitched in. It recognised that the only way to win over Punjab is providing people with free money. This is why AAP announced that after coming to power, it will be providing Rs 1,000 per month to every woman of Punjab. Moreover, like Delhi, AAP promised that it will be providing free electricity upto 300 units.
Read more: Freebie in agriculture sector can become the reason behind India’s next NPA crisis
Kejriwal’s freebie is untenable in Punjab
Kejriwal kept saying that he had done his calculations, but the fact is that achieving these goals is impossible without burdening the state with more debt. For example, the burden of providing free electricity is alone going to cost Rs 5,000 crore to Punjab’s exchequer. According to a report by The Print, Punjab, 5,000 crore will add up to the already existing power subsidy bill of Rs 10,668 crore.
Similarly, Rs 1,000 assistance to every woman of Punjab will require outlay of Rs 15,600 by Bhagwant Mann government. In total, freebies are going to cost Rs 20,600 crore to the state government of Punjab.
If it was the 1990s, then it would not be a big deal for the Punjab government to fulfil these demands (adjusted for Inflation). But, this is 2022 and Punjab of 2022 is not what it used to be. Not just culturally, but also economically. In fact, the decline in one is the reason for decline in the other.
Read more: Under AAP’s Bhagwant Mann, Punjab is another Sri Lanka in making
Punjab is reeling under debt
Congress government handed over the thorny throne of dilapidated Punjab to AAP. Within 5 years of its rule, Congress almost bankrupted the state exchequer as the debt on the Punjab increased from Rs 1.82 lakh crore to Rs 2.82 lakh crore during its tenure. Punjab has fared worst in India with respect to its Debt-to-GSDP ratio numbers.
Currently, Punjab’s Debt-to-GSDP ratio is 53.3 percent. Basically, for every Rs 1 of factory output which Punjab contributes, it takes 53.3 paise of loans. Unlike America, In India, it is not possible to keep running machinery through a series of debts and their restructuring. The high debt numbers piling up for over a decade has impacted Punjab a lot.
Punjab is getting de-industrialized
Currently, Punjab is watching a continuous cycle of de-industrialization. Shamika Ravi, a renowned Economist described Punjab’s precarious situation in following words, “Manufacturing clusters of Jalandhar, Gurdaspur, Mandi Gobindgarh and Ludhiana have been struggling over time and reported lack of growth and rampant closures. One of the major reasons for this is the non-competitiveness of Punjab compared to other Indian states. Several states, including neighbouring Himachal Pradesh, Jammu and Kashmir, and Uttarakhand have improved their ease of doing business environment and offered incentives such as 100 per cent income tax and excise exemption, subsidised working capital loans, etc.”
The problem of industrialization has been compounded by issues miring Punjabi Youth. Punjabi youths are probably worst hit by the menace of drugs. Substance abuse has only led to a worsening mental health crisis in the state. Punjabi families are the highest spenders on private medical care. The continuous addition of increasingly ‘ill youth’ has contributed to unemployment rate of state, which is higher than the national average.
Read more: “There is no drug issue in Punjab” Udta Sukhbir’s Udta Punjab remark
No solution to debt problem
In older times, Punjabis could pin their hopes on agriculture to revive their fortunes. But, even that is also fading away in the state. The continuous exploitation of ecological resources is rendering the state’s agricultural land towards infertility, leading to guzzling of more and more resources. Farmers are not willing to listen to experts’ suggestions about diversifying their crop pattern as well.
To summarise Punjab’s situation in simple words, it would be suffice to say with evidence that Punjab is surviving only on debt. But, the problem is that the state has almost nothing to pay it back to their debtors. AAP government’s insistence on not reforming the tax structure to bring in more cash to the coffers is not going to help the state which contributed most to the Green revolution.
Punjab has been one of the most prosperous states in independent India. It seems as if it has reached its zenith. It is now slowly turning into a BIMARU state.