With 2% share of investments last fiscal, Punjab faces an uphill task
FRESH IMPETUS Industry associations say govt should end redtapism, create enabling environment
CHANDIGARH: The Punjab government is banking on industrial growth to lift the state’s sagging economy. Chief minister Captain Amarinder Singh has travelled to Mumbai to talk to corporate bigwigs to investment in the state. And, his government is giving final touches to a new industrial policy, promising a raft of incentives and business friendly environment.
But the government, which took over six months ago, faces an uphill task if the Reserve Bank of India’s (RBI’s) latest figures on investments are any indication. Punjab, according to the RBI study on private corporate investment released two weeks ago, lags behind most states in attracting new investments in projects.
The RBI data shows the state had 2.1% share in private corporate investments in 2016-17. Its share fluctuated between 0.3% and 1.7% during the last 10 years, except in 2012-13 when it went up. Gujarat, Maharashtra, Madh ya Pradesh, K ar nat aka and Telangana have done far better. These five states got over 52% of investments made by the private sector last year.
BLAME TAX BREAKS IN NEIGHBOURING STATES
Punjab, which held two muchhyped investors’ summits during the previous SAD-BJP government to woo top industry
honchos to the state, blames the long-term tax breaks bestowed by the Central government on industrial units in hill states of Himachal Pradesh and Uttarakhand, among others, in 2003 for drop in investments and lan-
guishing industrial growth.
“Tax breaks for industrial units in hill states sparked off a rush of investors. Punjab’s industry lost competitive edge and several existing units shifted businesses or preferred these
states to expand,” said an industry department official.
Last month, the central government extended the tax exemption granted to hill states till March 2027, albeit as refund, under the new GST regime, prompting the state government to request the Centre to extend similar incentives to the border areas and Kandi belt. A study conducted by US-based Cato Institute in 2012 had ascribed the state’s slow rate of industrialisation to power shortages, high land prices, corruption and fiscal problems . Though the state is now power surplus, its fiscal problems have worsened.
FOCUS ON MSME, GOVT PLANS CLUSTERS
However, director, industries and commerce, DPS K ha rb and a, while attributing the flight of capital to hill states to “tax holiday”, said the government is coming out with an investor friendly industrial policy to attract new investments.
The new industrial policy, to be formally unveiled after the Gurdaspur Lok Sabha bypoll, proposes to give power at ₹5 per unit and exemption in stamp duty, electricity duty and external development charges, besides relief in state GST.
Kharbanda said the department will take cluster-based approach, focusing on micro, small and medium enterprise (MSME) industry. It has proposed 18 clusters for tractor parts, hand tools, foundry, surgical equipment, sports goods, printing and packaging, plywood units, plastic goods, hand tool, sheet metal, knitted outwear and sewing machines. The process of identifying land for nine of these is underway.