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Output down, no bailout in sight

Mandi Gobindgarh: Deputy Chief Minister Sukhbir Singh Badal often talks of running the state like a Chief Executive Officer (CEO), but his entrepreneurial acumen wasn’t good enough to give wings to the state’s industry.

Output down, no bailout in sight

What was once a steel furnace in Mandi Gobindgarh is now a deserted plot overrun by wild growth. TRIBUNE PHOTO: NITIN MITTAL



Ruchika M Khanna

Tribune News Service

Mandi Gobindgarh, January 15

Deputy Chief Minister Sukhbir Singh Badal often talks of running the state like a Chief Executive Officer (CEO), but his entrepreneurial acumen wasn’t good enough to give wings to the state’s industry. The once-robust industrial town of Mandi Gobindgarh, now reduced to a rust belt, exemplifies how the state government has let down this sector.

Since 2013, 62 of the 110 steel induction units in the town have shut shop, while 30 of the 70 foundries and about 200 steel rolling mills have closed down. The manufacturers of all tertiary steel items have now become traders. Be it along the GT road, on the outskirts of Mandi Gobindgarh or on the Amloh road, one spots defunct steel furnaces, foundries and rolling mills. What remains are deserted plots, overrun by wild growth. Much of the rusted machinery has already been sold. A lone security guard, posted near the factory gate, is tasked with warding off land grabbers. Last year’s suicide by at least two owners of these failed units is talked about in hushed tones. Industrialists fear that the worst is yet to come.

Mahinder Pal Gupta, a leading industrialist here, rejects the official take that the steel town failed to adapt to new technologies: “High input costs and high taxation, coupled with the state’s distance from ports, has made the local industry unviable.”

Gupta recalls that till three years ago, of the total steel and steel goods produced here, 1.50 lakh tonnes was used within Punjab each month. “But now, steel produced in Raipur (Chhattisgarh) is much cheaper. So, 50,000 tonnes of steel used within the state is coming from Raipur, while local units are working at 30-50 per cent of their capacity. The state government was aware of the crisis faced by the steel units, but it failed to come to our help,” he adds. Gupta also points out that neither freight subsidy nor a relaxation in power tariff has been given over the years. “The power cost to the industry is Rs 7.32 per unit, while in other steel-producing states, it’s as low as Rs 3.57,” the industrialist says.

The rot has spread to other industries, including cycles and cycle parts, sports goods; hosiery and textiles. While many small units across various sectors have shut down, the others are functioning at 50-60 per cent of their capacity.

Senior officials in the Bureau of Investment Promotion claim that the Invest Punjab summits held in 2013 and 2015 were quite successful. According to them, the state government managed to get 424 investment proposals worth Rs 31,205 crore, with big companies such as Cargill, ITC, Infosys Technologies; Amul and Indian Oil opening their units here. They contend that Punjab recorded a compound annual growth rate of about 7.5 per cent from 2004-05 to 2014-15. The contribution of the industrial sector to the state’s economy, too, has risen from 24.7 per cent in a decade.

NK Sharma, a former Chief Parliamentary Secretary, industry, says the past five years saw unprecedented infrastructure development. “The power-surplus state has an excellent road network, air connectivity and no labour pangs. The state has also been lauded for the single-window clearance and ease of doing business. If elected again, we will ease the tax regime for the existing industry and fast-track VAT refunds,” he adds.

According to a recent study by industry body Assocham, Punjab attracted investment worth Rs 1.98 lakh crore as on March 31, 2016, but its outstanding investment growth rate declined from the peak of 91 per cent in 2007-08 to minus 10.5 per cent in 2015-16. Punjab’s big industrial houses such as Trident looked beyond the state for expansion. The Rs 19,000-crore Guru Gobind Singh Refinery in Bathinda, commissioned days before the 2012 Assembly elections, was expected to anchor the growth of downstream petrochemical units, but it remains a distant dream.

A leading sports goods manufacturer in Jalandhar, requesting anonymity, says, “It’s true that some of the new investment has fructified, and we give the government credit for this. But the existing industry is ailing. The strength of Punjab’s manufacturing sector lies in the micro small and medium enterprises (MSMEs). The government is offering all kinds of concessions to the new big-ticket investors, while the existing SMEs are slowly becoming unviable,” he laments.

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