Agriculture, the mainstay of Punjab?s economy since the Green Revolution, has become the main cause for the slow growth of the state?s economy. For, enquiries reveal that the growth rate in the primary sector, which comprises agriculture and allied sectors, was just 2.17% in 2004-05.

It went down to 1.86% in 2005-06 and 1.82% in 2006-07. If the average of the last five years from fiscal 2002-03 to 2006-07 is taken, the agriculture and allied sector in Punjab grew at a meagre 2.21%, according to the state’s report on gross state domestic product (annexure to the vote-on-account presented in June 2007) .

Little doubt that in its latest report, the Planning Commission has observed that ??Punjab would be the lowest growing state in the country?? during 2007-12. The Planning Commission has observed that if ??deceleration in the rate of growth was allowed to continue, it would affect the income and employment levels in the state which was a cause of severe concern??. The poor growth in the primary sector was mainly because of stagnant agriculture.

The secondary sector, comprising construction, power and manufacturing sector grew by 5.65% in 2005-06. However, the growth of the secondary sector in 2004-05 was 7.88%.

Besides agriculture, the expenditure on salaries, pensions and interest payments used to serve debts eat up a major chunk of revenues which otherwise could have been used to launch new developmental schemes. The expenditure on salaries, pensions and interest pre-empted a huge 75.96% of revenue receipts in 2006-07. Major industrialists in the state recently met chief minister, Parkash Singh Badal, and finance minister, Manpreet Singh Badal, and suggested that expenditure on salaries etc., be brought down to less than 50% of total revenue receipts.

The state?s interest burden, too, has been rising. In 2001-02, the interest burden was Rs 3,179 crore, which rose to Rs 4,288 crore by 2006-07. As of now, the total debt burden is over Rs 52,000 crore. The expenditure on this count should not exceed the 35% mark, say experts.

As a result, Punjab is now considering the Gujarat model, where by ??rightsising?? government departments and undertakings, the state has been able to bring the expenditure on salaries, pensions etc., to less than 50%.

The ??state has not been able to attract private investment because of major concessions given by the Centre to Himachal Pradesh, Uttarakhand and Jammu and Kashmir. Rather there has been exodus of industry from Punjab to these neighbouring states due to concessions given to them??, says Manpreet Singh Badal.

Little doubt that in the secondary sector comprising manufacturing, power and construction, too, Punjab lags behind the all-India average. For instance, the average annual compound growth rate of GSDP in this sector in 2001-02 was 0.64% a against the all-India growth rate of 3.71%. It went up to 6.32% in 2005-06 but by that time growth rate at national level had shot upto 10.13%.

However, the government has claimed mobilisation of funds from unconventional sources, like Rs 210 crore from royalty on mines. However, experts point out that the receipts would never exceed the Rs 20 crore-mark.

With development plans suffering, Sukhbir Singh Badal, an MBA in finance and acting president of the ruling Shiromani Akali Dal, recently suggested a one-time installation fee of Rs 1 lakh each on more than 10,000 telecom towers put up by private companies in Punjab and Rs 10,000 as annual renewal fee. A surcharge on value added tax may also be considered by the state government.