Punjab, Haryana need to learn from each other

Haryana, which was carved out of Punjab in 1966 on the basis of the Punjab Reorganisation Act, has been a leader in economic development since 2008-09. But Punjab has been ahead in terms of economic and regional equity as well as social development, suggesting that the benefits of Haryana’s fast-growing economy have not been trickling down as evenly across poor, backward districts and social fields as in Punjab.

At the time of reorganisation, Punjab’s economy was larger than Haryana’s. The total income of Punjab was Rs 950.87 crore in 1966-67 compared to Haryana’s Rs 530.05 crore. Punjab remained ahead in this regard till 2007-08. However, in 2008-09, Haryana, with an income of Rs 1.82 lakh crore, took the lead over Punjab (Rs 1.74 lakh crore). In 2023-24, Haryana’s income touched Rs 10.95 lakh crore and Punjab lagged behind (Rs 7.44 lakh crore). Haryana’s economy has also been growing faster than Punjab’s. It grew at a rate of 6.4 per cent between 2011-12 and 2023-24, whereas Punjab’s growth rate was 5.3 per cent.

An almost similar trend is seen in per capita income. The per capita income of Punjab was Rs 720 at the time of reorganisation, higher than Haryana’s Rs 589. The predominance of Punjab continued till 2005-06. But in 2006-07, Haryana, with per capita income of Rs 49,261, took the lead over Punjab (Rs 41,883). In 2023-24, Haryana’s per capita income was Rs 3.25 lakh, whereas Punjab’s figure was Rs 1.96 lakh.

What is the secret of Haryana’s significant economic development? The National Capital Region (NCR), the GT Road, the structure of the economy and the management of public finances are the major contributory factors. Fourteen out of Haryana’s 22 districts are part of the NCR. The districts of Gurugram and Faridabad, both adjacent to Delhi, have been making rapid strides in the industrial and services sectors by reaping the advantages of robust infrastructure and a national market. The share of secondary and services sectors in the income of Faridabad and Gurugram in 2020-21 was as high as 96 per cent and 98 per cent, respectively.

The GT Road passes through several districts of Haryana, most of which are part of the NCR. No doubt this road has also been playing a significant role in Punjab’s development, but the combined advantages of proximity to the NCR and the passing of the GT Road through Haryana have been making all the difference.

The increasing influence of non-agricultural sectors (fast growth engines) on Haryana’s economy has also contributed to the growth trajectory. In 1966-67, the share of non-agricultural sectors in Haryana’s income was only 33 per cent, lower than Punjab’s (38 per cent). However, it increased to 83 per cent in 2022-23, much higher than Punjab’s (73 per cent).

Public finances are also better managed in Haryana. NITI Aayog has worked out the Fiscal Health Index (FHI) for 18 states for 2022-23. The FHI is based on five parameters — quality of expenditure, revenue mobilisation, fiscal prudence, debt index and debt sustainability. Haryana, with an FHI of 27.4, is at the 14th position, while Punjab (10.7) is at the bottom.

Learning from Haryana’s experience, Punjab should accord top priority to develop non-agricultural sectors, particularly the industry. Recent initiatives of the Punjab government to attract industrial capital and the Centre’s approval to set up the Sports Technology Extension Centre at Jalandhar can be seen from that perspective. Like Delhi in the NCR, Ludhiana should be made a nodal city around which planned development can be done.

Fiscal health plays a pivotal role in the growth trajectory of any state. Punjab should adopt a better approach to manage its financial resources by way of mobilising additional resources, controlling its expenditure particularly committed expenditure and rationalising subsidies, increasing capital expenditure and regulating public debt.

The story of economic development is just one side of the coin. The other side, covering equity and social development, is equally fascinating. A study of the proportion of people below the poverty line clearly reveals that Punjab has an edge over Haryana. Recently, NITI Aayog has released a report, ‘India: National Multidimensional Poverty Index a Progress Review 2023’, measuring poverty on the basis of three parameters relating to health, education and standard of living, further consisting of 12 indicators.

According to this report, in 2015-16 and 2019-21, Punjab had 5.57 per cent and 4.75 per cent of its population living below multidimensional poverty, respectively. The corresponding figures for Haryana were 11.88 per cent and 7.07 per cent, respectively.

Haryana by learning from Punjab's experience should make its economic model more equitable by devising pro-poor policies and also by improving the outcome of the ongoing poverty alleviation programmes.

Regional disparities are also more pronounced in Haryana. Being the largest district economy, with Rs 1 lakh crore income, Gurugram contributed 20 per cent to the state income in 2020-21. With Rs 62 crore income, Ludhiana, the largest district economy of Punjab, contributed only 15 per cent to the state income.

In Haryana, the income of the top-ranking Gurugram district (Rs 1 lakh crore) was 15.11 times larger than of the bottom one, Charkhi Dadri (Rs 6,640 crore). In the case of Punjab, this ratio was almost half (8.47) between Ludhiana (Rs 62,997 crore) and Pathankot (Rs 7,434 crore). Likewise, the ratio between the per capita income of the richest district, Gurugram (Rs 5.78 lakh), and the poorest, Nuh (Rs 61,931), was much higher (9.34) as compared to that between Punjab’s richest district (Ropar, Rs 1.67 lakh) and the poorest (Tarn Taran, Rs 89,323) — 1.87. These figures clearly reveal that in Haryana, the fruits of economic development across districts are less evenly distributed as compared to Punjab.

With a view to making economic development regionally more balanced, Haryana should incentivise investment in backward districts and introduce a special backward district development programme.

Social development measured on the basis of four indicators — child sex ratio, infant mortality rate, life expectancy and gross enrolment ratio — show that Punjab has an upper hand. During 2019-20, the child sex ratio was 904 in Punjab and 893 in Haryana.

In 2023, the infant mortality rate was 17 in Punjab and 26 in Haryana. Life expectancy was 70.5 years in Punjab during the 2019-23 quinquennial survey and 68.8 years in Haryana. Gross enrolment ratio for secondary education (2024-25) was 86 per cent in Punjab and 81 per cent in Haryana.

Taking a cue from Punjab, Haryana should prioritise social development so that the benefits of rapid economic growth may trickle down to the social sector.