Punjab has always been one of the most prosperous states in India and was at the forefront of the green revolution. Unfortunately, over the last few years, the state has slipped behind many states in various economic and social aspects. In a freewheeling interaction with The Dollar Business, Captain Amarinder Singh, who took over as Chief Minister of Punjab in March 2017, for the second time, discusses how his government plans to revive the economy and turnaround the state’s future.
INTERVIEW BY NILADRI S. NATH | September 2017 Issue | The Dollar Business
TDB: After being elected as the Chief Minister of Punjab, in March 2017, you claimed to have inherited a bankrupt state from your predecessor. How challenging was the situation?
Captain Amarinder Singh (AS): During the Shiromani Akali Dal-Bharatiya Janata Party (SAD-BJP) rule, the industrial environment of the state had changed completely and the state’s economy was in shambles. The state’s finances were completely mismanaged, and that had resulted in a huge deficit. Our unpaid liabilities reached Rs.13,039 crore. What’s more? Our debt had gone up to Rs.1,82,183 crore when we came back in power in 2017 – compared to Rs.51,155 crore in 2007 when we demitted office. In fact, the SAD government violated the Fiscal Responsibility Act by raising Rs.51,000 crore, six months before their term in government ended.
TDB: Keeping in mind the state’s deficit, what changes would you like to introduce in the industrial policy?
AS: The policy formulation is under process. Our aim is to ensure a level playing field for all industries and promote ease of doing business in the state. We aim to attract investment of Rs.5 lakh crore into the state within the next five years and increase the share of the secondary sector in the Gross State Domestic Product (GSDP) to 30% from the current 24%. We also aim to create large-scale employment opportunities for our youth, ensure availability of skilled manpower, build institutional capacity and enhance institutional linkages to bring synergy between state and central schemes.
TDB: How do you plan to attract the investment of Rs.5 lakh crore?
AS: Our new industrial policy will offer a lot of incentives to boost investor confidence. Some of these new measures are already in place. One of the most promising measures is a significant cut in power tariffs for industries for a period of five years. We also plan to provide improved and new infrastructure, especially in and around the industrial belts and cities. It is our endeavour to turn Ludhiana into a smart city with excellent infrastructure to attract investments.
In addition, we have decided to rationalise all levies – including market fee, infrastructure development fee, transport fee and stamp duty – to bring them on par with our neighbouring states. This will ensure a level playing field for our traders and manufacturers. We also aim to accelerate growth of MSMEs and focus on start-ups and entrepreneurship.
TDB: In May, this year, you were in Mumbai to meet potential investors.Have the meetings translated into anything concrete?
AS: The Mumbai visit was a very useful tool to restore the faith of investors, who have the capacity to build and accelerate industrial growth in the state. Potential investors we met during the visit included Godrej, Reliance Industries, M&M, Reliance ADAG, Britannia, Kansai Nerolac Paints, HDFC, ICICI, etc., and they were all eager to invest.
In fact, ICICI and HDFC have already started the groundwork for skill development programmes, while Kansai Nerolac Paints is in the process of setting up of a high-definition paints unit at Goindwal and has recently decided to increase its investment by another Rs.200 crore. Godrej, in collaboration with US-based Tyson Foods, is also setting up a plant in Ludhiana Food Park. Meanwhile, Britannia Industries is keen to start a new food processing unit and is currently looking for a suitable site.
M&M also plans to increase its foot print in Punjab by augmenting its existing capacity of manufacturing tractors and farm equipment, with an additional investment of about Rs.300 crore.
Further, in the education sector, leading groups such as Ashoka University and Amity are also exploring investment opportunities in Punjab.
TDB: Are you also planning to attract foreign investment into the state?
AS: Once you gain the confidence of investors, they – domestic or international – start coming on their own. With that said, we have had delegations from Japan, Australia and Israel – amongst others – who have approached us for collaboration in various sectors. In fact, Israel has invited me to come and discuss new opportunities for investment in Punjab and I am considering to visit the country in the near future.
TDB: You have identified some potential sectors under ‘Progressive Punjab’ initiative. What extra efforts are you putting into developing these sectors?
AS: We have identified manufacturing, textiles, life sciences and healthcare, agri and food processing, electronics system design and manufacturing, and aerospace and defence as prospective sectors. The government is continuously trying to bring new technology from India’s leading companies so that goods manufactured in the state meet global standards. This will boost exports from Punjab. We are also motivating the Punjabi diaspora to contribute towards research and development and industrial growth in Punjab.
We believe that these initiatives can help us generate employment opportunities for our youth – particularly in the manufacturing sector. I had talked about the importance of industrial growth in Punjab during the recently held ‘Rising Punjab 2017’ event. And I must mention that we are already in the process of framing a new industrial policy to draw a clear roadmap to achieve the desired results in a defined time period.
TDB: You recently held meetings with experts from Israel and Australia to revamp the existing crop cultivation system and venture into high-value cash crops. Can you elaborate on the plan?
AS: Crop diversification is the only longterm solution to the problems of our farmers. Even during my earlier tenure as the Chief Minister, I had aggressively pursued such diversification – and this time too, I have initiated several steps to create an enabling environment to promote cash crop cultivation in the state to boost farm income. We are working closely with these countries to find possible ways and means to bring crop diversification to the state in a big way. For instance, we are promoting horticulture, bee-keeping, etc., to enable the farmers to get out of the vicious wheat-paddy cycle.
TDB: Punjab is a power surplus state. Do you plan to export power?
AS: Being a power surplus state, the first thing we did was to cut power tariff for our industries. As for exporting power, we have already raised the issue with the Centre and explained the need to export power to neighbouring states like Nepal and Pakistan. We have already received a promising response from the Prime Minister, and we’re hopeful that we will be able to export power soon.
TDB: What is Punjab Small Industries and Export Corporation (PSIEC) doing to promote exports from the state?
AS: PSIEC has been entrusted with the duty to develop world-class clusters and convention centers in the state. This will help investors get the infrastructural support to build export-oriented manufacturing units. In addition, we will also organise national and international trade fair and conferences to attract more business, which will help improve the state’s economic growth and boost exports.
TDB: The growth of the services sector in the state has not been satisfactory. How do you plan to give it a boost?
AS: Tourism, information technology and healthcare are our focus tertiary sectors. Being the gateway to north India, Punjab has tremendous growth potential in these sectors. Our strategic location, high per capita income, homogeneous urbanisation and high standard of living can be leveraged to attract service professionals to Punjab. The state’s new industrial policy will also provide systems and processes to support these high-potential sectors.
TDB: Infrastructure development is an important part of your growth plan. What can we expect on this front in the near future?
AS: As announced in the Budget 2017, the government plans to develop six industrial parks in Punjab to promote organised industrial growth. It is important to note that under the Goods and Services Tax (GST) regime, the logistics and transport sector in Punjab (being a high consumption state) is expected to witness high growth. The Eastern and Western corridors will leverage the potential of low-cost logistics for trade and commerce – both nationally and internationally. Other than setting up Punjab State Industrial Infrastructure Corporation (PSIIC), we will develop new industrial infrastructure and land banks, integrated industrial townships and industrial urban corridors. We believe that every part of the state will benefit from these new developments, and PSIEC, PSIIC and Urban Development Authorities are actively working to achieve this goal.
TDB: Punjab’s GSDP growth has been decelerating for the past few years. How do you plan to fix this?
AS: We have a multi-pronged approach in place. This includes thinking out of the box, introducing cost efficiencies by cutting down unnecessary and wasteful expenses (such as putting an end to VVIP culture) and wiping out corruption so that the state does not lose its hard-earned money. In fact, just one initiative, ending the sand mining mafia and going in for reverse bidding, has made a difference to our revenues.
Within the first three months of forming the government, our VAT revenue rose to Rs.6,012.96 crore (for April 1-June 30, 2017 period) from Rs.4,568 crore (in the same period last year). We have successfully conducted excise auctions for FY2018 and realised Rs.1,016 crore, which is 23.1% up from FY2017. We think financial discipline and prudence are the need of the hour and we are aggressively pursuing the same