Chandigarh, January 29: Mr. Swaminathan S. Anklesaria Aiyar, a research fellow at the Cato Institute, USA, and a senior economic columnist and tv commentator was in the city to discuss the recently published Economic Freedom of the States of India 2012, co-published by Cato Institute, USA, Indicus Analytics, and Friedrich Naumann Foundation, New Delhi, especially in the context of Punjab.
Interacting with the media Mr Aiyar said that the report measures economic freedom from state to state within the country with results providing an empirical roadmap for the state governments to have better governance and policies for the welfare of its people.
Punjab’s rank, as per Economic Freedom Index (EFI) has slipped from 6th position in 2005 to 12th position in 2011. Though there had not been major decline in freedom rating which dipped marginally from 0.41 to 0.39, however the state has slipped in relative terms vis-à-vis other states like Gujarat, which have improved their ratings dramatically.
In a special chapter devoted to the state of Punjab authored by Swaminathan Aiyar, “Why Punjab has suffered long, steady decline”, he laments Punjab’s loss of economic leadership since 1980s despite having been the fastest-growing and richest states of India, and having successfully led the green revolution reducing India’s dependence on food aid.
Since the 1990s, the state’s GDP growth in 1994-2002 was 4.32 percent per year against the national average of 6.16 percent and during 2002-2011, the state was 6.61 percent against national GDP growth rate of 7.95 percent.
Mr. Aiyar suggests that the State can improve its position by tackling chronic fiscal deficit, avoiding public spending on unproductive subsidies like free power for farmers, ending perverse incentives that encourage land speculation pushing up land prices making industrial investments uneconomical, and freeing agricultural marketing from the grip of unscientific controls.
Certain recent developments in Punjab, the report says, augur positively for the state especially private investment in power that would meet the power shortage, the PPP in health, education and infrastructure, the improvement of administrative efficiency through Right to Service Act, and possible rise in agricultural productivity through big investments made possible through long-term farm leases, and opening of trade between India and Pakistan through the state.
Ludhiana is ranked the most business-friendly of the country’s top 17 cities on different parameters of doing business, that shows that Punjab has made commendable efforts to create a good business climate at the city level.