Why industry opts to skip Punjab?
The state remains an uneasy place for doing business. The government seems to have little idea of what kind of industry the state needs. Any or every type of industry won’t do. Political and bureaucratic controls must also go.
By Nirmal Sandhu
Senior journalist asked to comment on Punjab occupying the 20th rank on the ease-of-doing-business index, Capt Amarinder Singh expressed disbelief. He was dismissive of the whole exercise. Whether the Punjab Chief Minister likes it or not, industry relies on objective criteria such as contained in the index more than investor summits or one-to-one meetings with politicians to decide on fresh investment. Doubts about the survey or fears of its political manipulation could have arisen had the BJP-ruled states occupied the top slots.
However, this is not the case. Andhra Pradesh being at number one followed by Telangana and Haryana should put at rest any apprehensions about the fairness of the survey.No one at the top in Punjab has had the courage to own up the failure or at least make a promise of better performance the next time. The leadership shuts its eyes to the reality.
And the reality is: Punjab is not attracting new industry for many reasons which all add up to reflect poor governance and a reluctance to lift political and bureaucratic controls. Instead of rushing to Mumbai to woo industrialists soon after taking charge, the Chief Minister should have first sat down to put the state in order by fixing broken institutions and restoring a semblance of rules-based governance.
However, a sit-down with an Ambani or an Adani in five-star comforts seemed a more alluring and headline-grabbing proposition.Photo-ops with industrialists won’t hide the ugly potholes on the state’s road to industrialisation: urban congestion, chaotic traffic, inadequate infrastructure, water and air pollution, high land prices, risks to life and property, red tape and corruption. These are known put-offs for industry which no government in Punjab has tried hard enough to remove over the years.
In a state where political leaders need high security to move around, display arrogance and remain mostly inaccessible, exaggerate the threat from Khalistani separatists, patronise gangsters and use helicopters to travel, how can moneybags feel safe and think of investing in a largely dysfunctional state? Politicians just like to be seen doing something for Punjab which keeps them in headlines.
The government seems to have little idea of what kind of industry Punjab needs. Any or every type of industry won’t do. Green units need a preferential treatment. Without realising whether a car manufacturing unit was viable in Punjab and whether the state incentives and facilities matched Gujarat’s, former Deputy CM Sukhbir Badal joined the race for the Nano project after the Tatas decided to relocate from West Bengal. Narendra Modi as Gujarat Chief Minister had built a large land pool and readily made available the kind of land the Tatas were looking for. Punjab was not that prepared.
However, Sukhbir’s failure to get the Nano project has proved a blessing in disguise. No one is buying the car. Last month, the company produced only one Nano. Punjab has been saved from wasting its limited resources on a failed project. Sukhbir did not spend similar energy or show similar enthusiasm in bringing units for food processing, a subject his wife handles at the Centre.
The political leadership, both white- and blue-turbaned, has appeared so desperate getting industrial units for Punjab that it has ended up negotiating bad deals — the refinery at Bathinda and private power projects being prime examples. Impartial studies are required to find out if Punjab’s gains from these projects, if any, have matched the liberal giveaways.What also needs to be investigated is whether any industry left Punjab on account of the Central tax holiday for Himachal Pradesh since Baddi has got only a few pharmaceutical units, which hardly originated in Punjab.
Punjab’s proximity to the border is another familiar political excuse for the state lagging in industrial development. The real reason why industry skips Punjab is shoddy governance as is evident from the “ease” index. Local industrialists keep planting reports in media to build the narrative that industry is dying or fleeing the state. This is done to extract government concessions. The recent visit of Bihar officials to Punjab has provided them another opportunity to blackmail the government.The consequence of all this is that Punjab has ended up in a financial mess, saddled with units that, being unviable, should have closed long ago. Year after year, the government keeps throwing good money after bad. To humour industry, it even goes soft on tax evasion and industrial pollution. Instead of preparing a level field with tax breaks on a par with other states and giving a leg-up to smart, promising start-ups, budgets and industrial policies are tailored to the needs of specific interests. For no apparent reasons, builders keep getting tax cuts. In a market economy, businesses that cannot compete are allowed to fail. Punjab keeps them perpetually on the sick bed and bleeds the exchequer. States, where politicians have no business interests to serve, use green taxes to discourage polluting industries.
Politicians across the board have not just permitted but also nurtured industries that contaminate rivers, canals and other sources of water, playing havoc with public health and forcing the state to spend on maintenance and rescue operations. Experience shows that the Punjab political leadership has little clarity on the role of the state, which keeps ever expanding and ever interfering. Handouts are decided and delivered selectively. The technology exists to eliminate or minimise personal interface. But that is not put to use. Neither politicos nor bureaucrats want this to happen.
The result: scams.The Chief Minister alone faces trial in two major scams: one for granting exemption to a private builder while transferring 32 acres of prime land of the Amritsar Improvement Trust and the other of showering Rs 1,144-crore benefits on a private company for constructing a city centre in Ludhiana. In both cases, the Vigilance Bureau took U-turns and filed FIR cancellation reports in courts. Scams would not have happened had the government played neutral and followed the rules. The police and the bureaucracy have trained themselves to not raise the alarm on seeing rule-breaking at the highest level. A former SSP who registered the FIR in the Ludhiana case has now spoken up after he got the familiar police treatment, post-retirement, to fall in line.
Enforcement of the rule of law is a pre-condition for the state having a congenial environment for industry and development. The government is expected to play a limited role, laying down the rules of the game and punishing deviations, apart from getting out of the way of entrepreneurs. This is what politicians in Punjab don’t do or let state institutions do because automatic approvals would mean an end to the ease of making money at various levels.
Courtesy: The Tribune