1.1 INTRODUCTION 1. Punjab entered the Eleventh Five Year Plan after a sluggish performance in the Tenth Plan period. The economy of Punjab grew at an annual average growth rate of 5.11% consistently under-performing against the national average of 7.80% during the 10th plan. The 11th plan targets of growth for the State were fixed at 5.90% against the target of 9% for the country. The economic growth in the State was estimated to be 6.88% and 6.40% during 2007- 08 and 2008-09 respectively. The advanced estimates for 2009-10 project a growth rate of 6.69% against the national growth rate of 7.17%. Record procurement of food grains and the tertiary sector has mainly contributed to this high growth. 2. Almost two decades of militancy, however, not only retarded the expansion of the manufacturing sector in the State but also perniciously impacted upon all other sectors of the economy as well as delivery of public services. The land-locked geographical location of this border State further imposes its own limitations upon external investment. The crisis in the farm sector has also started manifesting itself through falling farm yields on account of soil- nutrient imbalance and absence of propagation of new seed varieties, depletion of ground water resources and mounting farm indebtedness. The present agricultural system is increasingly becoming ecologically and even economically untenable. Punjab’s hopes for resurging as a front-runner State in economic growth thus hinges on rejuvenation of its agriculture sector as well as successfully expanding its manufacturing and services sector. 3. The Annual Plan for 2010-11 seeks to impart a special thrust to the development of infrastructure with a focus on roads, power generation and rejuvenation of the irrigation network. Besides, the Rs 1500 crore World Bank sponsored Punjab State Road Sector project to upgrade 1100 km of roads and the four high speed Expressways under PPP mode are in the pipeline. The government is committed to make Punjab a power surplus State by 2012 by adding a capacity of 5000MW. The State is also exploring the realm of Renewable Energy Sources for sustainable development. The construction work at International Airport, Mohali and the Sahnewal Air Strip is in full swing. The State master plan for Tourism is ready for implementation through the Rs. 300 Cr. loan from Asian Development Bank. To boost the industrial infrastructure, Punjab Special Economic Zone Act, 2009 has been enacted. The State 1 Govt. is modernizing the bus stands and is replacing the old buses of Punjab Roadways by the high standard PUNBUS buses. 4. Public investment in agriculture and allied sectors is being given special impetus consistent with the guidelines of Rashtriya Krishi Vikas Yojana (RKVY) and the National Horticulture Mission. The State Government is adhering to its programme for providing drinking water supply to all rural habitations by 2012. Reverse Osmosis Plants are being installed in South-West Punjab to ensure safe drinking water to its villages. Education and Skill Development are being accorded high priority with NABARD assisted Projects for EDUSAT and upgradation of technical Institutions into multipurpose academies. The Medical Colleges and Health Institutions are being upgraded and all staff vacancies are being filled up. The welfare of disadvantage sections of the society has been accorded a high priority. 5. The State is set to take a maximum benefit of NREGS, JNNURM and other flagship schemes of the Government of India. The State is committed to add to the comfort and cleanliness of our cities. We are undertaking on large scale, the extension and augmentation of urban water supply and sewerage system in various towns. Projects are set for containing urban waste discharge into Budda Nallah, Holy Bein and Rivers Sutlej and Ghaggar. The State is introducing Administrative and Police Reforms for Good Governance through effective citizen delivery system. Computerization of Govt. offices, land records, common service centres, State Data Centre, State Wide Area Network should make the Govt. functioning easy, efficient, transparent and people friendly. 6. The State has consistently contributed more than 45% of wheat and 25% of rice thereby ensuring National Food Security. The State provides a huge subsidy in shape of free power to the farmers for record production of food grains. Inspite of Drought like situation in the year 2009-10, the State produced 168.35 lac MT of paddy. The farmers incurred an additional expenditure of Rs. 1000 Cr. for purchase of gensets and diesel. The State had to purchase additional power amounting to Rs. 1420 Cr. The Govt. of India was requested to compensate the State Govt. and the farmers for this extra cost but no relief has been announced in Union Budget 2010-11. Rather, the State is often put to disadvantage in allocation of funds under central schemes. The State having hardly any unirrigated area is put to a disadvantage while allocating funds under Rashtriya Krishi Vikas Yojana. Inspite of having 29% SC population, due to skewed BPL criterion, the State does not receive any substantial grant for 2 Poverty Alleviation Programmes. Similarly due to high weightage on the income distance criterion, the devolution of Central Taxes to the State is very less. The State, having provided primary schools as per national norms, 100% rural link road connectivity and 100% rural electrification is deprived of adequate funds under SSA, PMGSY and RGGVY. We urge the GoI to review the criteria of the above mentioned schemes. Keeping in view that the State has created the infrastructure out of its own efforts and the present grim State of finances, the GoI should provide adequate funds for upgradation & maintenance of these assets, be it roads, irrigation network, schools, electrification etc. STATE ECONOMY 7. The State incurred a heavy debt during the long period of militancy and the consequent President’s rule. The insurmountable debt burden and persistent gap between revenue and expenditure are unfortunately, the characteristics of the State’s Public Finance. The staggering debt of Rs. 63,217 Cr. in 2010-11 equivalents to 33% of our GSDP and its interest payments eat away 20%. of our annual revenue receipts. With a fiscal deficit of 4% and revenue deficit of 2.3%, during 2008-09, our committed expenditure formed 70% of our Rs. 22919 Cr. of gross revenue receipts. The State is caught in a vicious cycle with bleak financial prospects. On the other hand, high per capita income makes Punjab a rich State with a poor Government. The growth rate in the State over the previous years is summarized in the table given below:- (Percent per Annum) Punjab India Period/Sector Primary Secon Tertiary Overall Primary Secon Tertiary Overall Dary dary (1980-81 Prices) 6th Plan (1980-85) 5.37 5.04 5.14 5.23 5.63 6.05 5.42 5.66 7th Plan (1985-90) 5.24 8.65 5.22 5.98 3.58 6.49 7.41 5.79 (1993-94 Prices) 8th Plan (1992-97) 3.08 7.10 5.78 4.81 3.85 8.28 7.87 6.76 9th Plan (1997-02) 1.90 4.97 5.80 3.97 2.16 4.63 8.08 5.50 3 (Percent per Annum) Punjab India Period/Sector Primary Secon Tertiary Overall Primary Secon Tertiary Overall Dary dary (1999-2000 Prices) 10th Plan (2002-07) 2002-03 (RE) (-)1.15 3.02 6.25 2.85 (-)5.89 6.89 7.47 3.84 2003-04(RE) 5.77 6.85 5.92 6.07 9.29 7.80 8.49 8.52 2004-05(RE) 2.16 10.10 4.52 4.95 0.79 10.54 9.13 7.47 2005-06(RE) 1.94 7.77 4.73 4.50 5.75 10.65 10.59 9.52 2006-07(RE) 2.78 11.22 8.45 7.25 4.43 11.19 11.23 9.75 Overall 10th Plan 2.28 7.75 5.96 5.11 2.74 9.40 9.37 7.80 11th Plan 2007-08(PE) 3.92 9.77 7.35 6.88 4.70 8.51 10.85 9.01 2008-09(QE) 3.42 8.01 7.56 6.40 1.80 3.90 9.67 6.70 2009-10(AE) 3.74 8.41 7.68 6.69 1.00 8.11 8.72 7.17 Note:- The All India figures for the year 2009-10 are based on 2004-05 prices. 8. The State Economy’s rate of growth at 1999-2000 prices during the 10th Five Year Plan was 5.11% per annum against the target of 6.40% fixed by the Planning Commission. The country as a whole witnessed 7.80% average growth during the 10th Plan against the target of 8%. During the 11th plan, Punjab has been consistently growing at above 6% against the target of 5.9% fixed by the Planning Commission. COMPOSITION OF STATE ECONOMY 9. The following table shows the relative contribution of different sectors to the State Economy over the years : (Rs. In Crores) Total Primary Secondary Tertiary Year Economy % % % 1980-81 Prices 1980-1981 5024.70 2468.61 49.13 1005.48 20.01 1550.61 30.86 4 Total Primary Secondary Tertiary Year Economy % % % 1985-1986 6686.79 3358.20 50.22 1459.24 21.82 1869.35 27.96 1990-1991 8377.85 3945.44 47.09 2022.44 24.14 2409.97 28.77 1993-94 Prices 1995-1996 32433.33 14246.03 43.92 7508.47 23.15 10678.83 32.93 1999-2000 Prices 1999-2000 67161.97 25213.14 37.54 15280.26 22.75 26668.57 39.71 2000-2001 69803.14 25570.40 36.63 16145.10 23.13 28087.64 40.24 2001-2002 71146.17 25785.73 36.24 15809.10 22.22 29551.34 41.54 2002-2003 73173.51 25489.46 34.83 16287.25 22.26 31396.80 42.91 2003-2004 77617.82 26958.95 34.73 17403.41 22.42 33255.46 42.85 2004-2005 81460.12 27540.76 33.81 19161.54 23.52 34757.82 42.67 2005-2006 85125.41 28074.84 32.98 20649.48 24.26 36401.09 42.76 2006-2007(R) 91299.19 28855.87 31.61 22965.59 25.15 39477.73 43.24 2007-2008(P) 97576.75 29986.60 30.73 25208.92 25.83 42381.23 43.44 2008-2009(Q) 103825.55 31011.63 29.87 27227.37 26.22 45586.55 44.31 2009-2010(A) 110774.89 32170.15 29.04 29516.29 26.65 49088.45 44.31 The contribution of tertiary sector is more than that of primary sector since 1999- 2000.