Living and dying in a shell

To seek financial assistance from the Centre, a state government has to paint a grim picture, even paper over some of its own flaws in governance. But back home, people have to be told all is well, especially if elections are approaching. That should explain why Punjab Industry Minister Madan Mohan Mittal insists few units have shut in the state while thousands new ones have come up since 2007. Industry leaders have a different tale to tell: nothing is going right, and the state government is to blame for all of it. The truth is industry in Punjab has not been functioning on principles that are needed to survive in a free market. And the political leadership, dependant on the business community for electoral funds, has been condoning unsound economic practices by extending props in the form of concessions and subsidies, if not overlooking outright theft.

Another unpalatable truth is that more attention has been paid to the demands than the inefficiency of the industry in the state. Most of it — including cycle, steel, hosiery and sports goods — was set up in the pre-reform era, and thrived for a long period. For all that time, no new resources were invested in modernising machinery or skill development. The opening up of imports thus put many out of business. Massive amounts of tax evasion and power theft went on for decades, till the government could afford that no more. Today every move towards better tax realisation is opposed. Geography also determines the nature of industry. Punjab cannot haul steel and coal all the way across the country and hope to be competitive.

Any correction now cannot be a matter of tweaking a few taxes and changing permit procedures. The government in its last leg before the elections may, unfortunately, continue to lack in will. Any initiative to kick-start a new economic growth cycle will necessarily have to come from industry itself. They have to come up with healthy suggestions for the government, which needs to facilitate rather than prescribe. All concerned know the truth; it's only about acknowledging it. To begin with, Mr Mittal can come clean with the facts.