A case of misplaced priorities for expert group
After the imposition of the lockdown, Punjab appointed an expert group headed by economist Montek Singh Ahluwalia to develop a strategy for the revival of the state’s economy in the post-Covid period so as to restore its normal growth rate.
The group was expected to submit its first report by July-end and the final report by December this year. It recently submitted its first report, which is under discussion. Feedback was obtained from multiple sources in the administration and built on work that was in progress.
Due to the Covid restrictions, this group did not meet various stakeholders. But the corporates were represented as members in the group itself. Their views and demands form part of the recommendations. The other interest groups such as workers and employees, farmers, small traders, owners of micro, small and medium enterprises (MSMEs), artisans, repair shop owners, dhabas and restaurant owners were neither contacted nor did their views form part of the deliberations.
The members did not consult experts in the universities and research institutes of the state who have deep knowledge of the economy and society of Punjab. The recommendations, therefore, do not reflect the ground reality but represent the perception of this group which is largely based on ideological considerations of the neo-liberal economic theory.
The group’s perspective has been presented at the outset which states that the “faster rate of growth of Punjab depends on whether Central and state governments are willing to implement reforms that improve economic efficiency and enhance India’s competitiveness. These reforms were important even before the pandemic but have become more urgent to revive confidence among investors and consumers.”
Further, it is stated that the new wave of technological development based on automation and artificial intelligence could disrupt labour and product markets. Charting a course is complicated by the fact that Punjab’s economic prospects do not depend only on the actions of the state government. This will be heavily influenced by what happens to the Indian economy as a whole as the state’s economy is integrated with it.
The specific recommendations are largely influenced by the understanding that Punjab’s policy framework must fit into that of the Centre. This is reflected in sectoral policies suggested such as support for the three ordinances issued by the Centre; promoting big private companies in the trade of agricultural produce; contract farming; and the creation of private agricultural markets beyond the control of state agricultural market committees. The group has also recommended payment of power subsidy via direct bank transfer (DBT) after the bills are collected from the beneficiaries as proposed in the Electricity Amendment Bill 2020, pending before Parliament.
It has also been suggested that the public distribution of foodgrains to the BPL families be replaced by DBT to the poor. These moves are being opposed by Punjab and its farming community is campaigning against the three ordinances and the proposed Electricity Bill. Similarly, it has been recommended to amend labour laws on the pattern of Gujarat, Haryana and UP, but Punjab has refused. There is visible bias for corporate players. On the one hand, the group is for rationalising power subsidy to the agriculture sector and considers it as a net burden on the state exchequer and on the other, recommends cheap power to the industry, irrespective of size, at Rs 5 per unit against the high rates charged from domestic consumers.
Similarly, a recommendation is made that agro-processor buyers of wheat should not be charged fees/taxes in the grain markets beyond 2% while the rate is high for the other buyers. Several concessions suggested for the industry reflect the demands of the corporate sector, rather than the state’s needs.
It is a fact that the industry did not pay migrant workers during the lockdown and they moved out and the state government paid for their rail fare. This pattern of business and industry prevailed at the all-India level, yet the expert group wants business to be handed over to corporates, but seeks social security and houses for migrant labour, to be provided by the government, ignoring the interests of local labour, while many among them might be urgently in need of such provisions.
The recommendations for crop diversification away from wheat-paddy rotation and shifting of 1 million hectares to new crops is more than three decades old, recommended by the Johl Committee-I in 1986, Johl Committee-II in 2002, and by the Kalkat Committee in 2013.
This programme has not taken off, rather the area under wheat-paddy has been growing. This is because enabling conditions could not be created in the form of assured MSP and assured purchase. Without analysing the behaviour of corporates in not paying the announced price, it has been forcing farmers to drop those crops in the second round. This is reflected in the fact that sugar mills all over India did not pay farmers for many years for the cane supplied. Without having a firm mechanism for MSP, market clearance and timely payment, this recommendation seems to be mechanical and indicates blind faith in privatisation. This can spell disaster both for the farming community and the working class, leading to deterioration in income and working conditions.
The group has not tried to understand the failure of private extension services for Punjab’s farmers when diversification was begun in 2002. The group, while recommending promotion of milk, vegetables, fruits, poultry, goat, pig and chicken meat, has not realised the associated risks. The producers of perishable agricultural goods suffered colossal losses both in Punjab and other states. Many of them have become bankrupt during this period. This is well reported in the media but the expert group missed this and did not make any recommendation towards the revival of trust in crop diversification.
Lastly, the MSME sector employs 20% of the workforce in the state. Their number is 14.65 lakh, but only 44,000 are registered. Those unregistered (14.21 lakh) are not eligible for benefits under the Centre’s Rs 20 lakh crore relief scheme. The group still argues that Punjab should try to help them get benefits under the Central scheme. It is a classic case of lack of understanding.
