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Economic Transformation of a Developing Economy pp 451–466Cite as

Breaking the Mould: Thoughts on Punjab’s Future Economic Development

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Part of the book series: India Studies in Business and Economics ((ISBE))

Abstract

The economy of Punjab state in India offers an interesting case study. Punjab has been for decades––and remains––one of India’s better-off states, and so it tends not be included in the primary focus of national programs meant to reduce poverty or spur economic development. But, Punjab’s relative economic position within India has declined rapidly in recent years. This decline has been accompanied by environmental problems and symptoms of deep social malaise. As will be argued in this chapter, Punjab is facing a multidimensional crisis that requires urgent attention. This chapter provides an overview of Punjab’s crisis, through an analysis of the dynamics of Punjab’s economic development as shaped by its political economy, its social dynamics and exogenous events since independence. It argues that one can understand both Punjab’s success in certain areas of agriculture and its subsequent relative decline in terms of the interaction of these factors. It uses this historical analysis to provide an assessment of Punjab’s future economic development, in terms of the structural changes that are needed, and how these can be encouraged or implemented by policy makers within the constraints of its current political–economic equilibrium.

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Notes

  1. 1.

    Other papers in this volume provide detailed analyses of specific sectors of the Punjab economy, institutional and societal factors, and particular policy issues. Overall, this volume seeks to provide inputs that can help in arriving at a consensus on policy measures for the revival and rejuvenation of Punjab’s economy. A brief document that tackles a similar set of issues is Centre for Development Economics and Innovation Studies (2012).

  2. 2.

    A detailed discussion of different concepts of industrial policy and their applicability to the experience of India and China is in Kaur and Singh (2013).

  3. 3.

    In a work specifically examining the Green Revolution in Punjab, my co-author and I introduced a different set of three ‘I’s’: infrastructure, information and incentives (Singh and Kohli 2005).

  4. 4.

    A useful collection of articles on the geography of Punjab is in Journal of Punjab Studies (2004).

  5. 5.

    On the role of the Arya Samaj, see Jones (1973, 1976).

  6. 6.

    An excellent account of Punjab’s history in the Sikh period is Grewal (1998).

  7. 7.

    See Singh and Kohli (2005), Nair and Singh (2014), and the references therein, for more details of this account of the Green Revolution in Punjab.

  8. 8.

    Punjab’s experience of industrial development is well documented in Jain (2016) and the references therein.

  9. 9.

    An early analysis of the Green Revolution was Frankel (1971); see also Bhalla and Chadha (1983), Singh (2001).

  10. 10.

    A classic early account of peasant indebtedness in Punjab is Darling (1928). Post-Green Revolution credit markets have been analysed in Gill (2000, 2004, 2016). A more general discussion of the power of intermediaries in Indian contexts is Harriss-White (2003).

  11. 11.

    There are many different accounts and analyses of the history presented here: for example, see Deol (2000), Singh (2008), Chima (2010), Thandi (2016), Singh (2016).

  12. 12.

    This statement is based on anecdotal evidence and journalistic reports, since it is difficult to document such activities. The recent arrest of J. Jayalalitha in Tamil Nadu illustrates the pervasiveness and size of the problem all over India, not just in Punjab.

  13. 13.

    For a discussion of Punjab’s earlier attempts to create a software industry, see Singh (2008).

  14. 14.

    See Express News Service (2013) for an account of this speech, including the quote.

  15. 15.

    For recent analyses of problems and solutions for Punjab’s agricultural economy, see Singh (2013), Munjal Institute for Global Manufacturing (2013a, b), and the majority of chapters in this volume.

  16. 16.

    For a discussion of Indian manufacturing, see Sharma and Singh (2013). Kaur and Singh (2013) also provide some analysis and comparison with China.

  17. 17.

    One useful recent analysis of Italy’s competitiveness is Tiffin (2014). Putnam (1993) provides a classic analysis of the origins of long-standing differences between northern and southern Italy, in terms of social capital.

  18. 18.

    For example, see The Economist (2014), Rattner (2011) and Linnemann (2007).

  19. 19.

    The Swiss example, unlike the East Asian cases described subsequently in the chapter, is not one of strategic vision. Weder and Weder (2009) include democracy, decentralisation, competition, flexible labour markets and immigration among factors that helped Switzerland’s early economic growth.

  20. 20.

    For example, see Amsden (1989), Wade (1990), Kaur and Singh (2013).

  21. 21.

    This understanding of the Japanese experience does not require accepting a strong version of the role of industrial policy, as famously articulated by Johnson (1982).

  22. 22.

    See Kaur and Singh (2013) for details of the Chinese case.

  23. 23.

    Of course Kerala has established itself as an international provider of ayurvedic health services, combined with tourism. However, the global market is sufficiently large, and Punjab is sufficiently different in what it can offer in this sphere.

  24. 24.

    This is the point of the Rajan and Zingales (2006) analysis.

  25. 25.

    To some extent, this is a generic problem, and affects India as a whole, not just Punjab. Crony capitalism, which is related to this problem of vested interests, also creates distortions in business investment, but can be based on social or family ties, rather than solely on the influence of money.

  26. 26.

    An overview of the status of education in Punjab is provided by Brar (2016).

  27. 27.

    Kapur and Mehta (2008) provide an overview of Indian higher education that discusses these issues.

  28. 28.

    See also Singh (Singh 2008a, b).

  29. 29.

    For example, see Nelsen (2005).

  30. 30.

    To quote Evans (1995, Chap. 1): “The internal organization of developmental states comes much closer to approximating a Weberian bureaucracy. Highly selective meritocratic recruitment and long term career rewards create commitment and a sense of corporate coherence. Corporate coherence gives these apparatuses a certain kind of “autonomy.” They are not, however, insulated from society as Weber suggested they should be. To the contrary, they are embedded in a concrete set of social ties which binds the state to society and provides institutionalised channels for the continual negotiation and renegotiation of goals and policies. Either side of the combination by itself would not work. A state that was only autonomous would lack both sources of intelligence and the ability to rely on decentralised private implementation. Dense connecting networks without a robust internal structure would leave the state incapable of resolving “collective action” problems, of transcending the individual interests of its private counterparts. Only when embeddedness and autonomy are joined together can a state be called developmental. This apparently contradictory combination of corporate coherence and connectedness, which I call “embedded autonomy,” provides the underlying structural basis for successful state involvement in industrial transformation.

  31. 31.

    Interestingly, voters in Punjab gave the Aam Aadmi Party its only seats in Parliament in the last general election, of May 2014, seeing it as a new alternative to the Akali–BJP coalition.

  32. 32.

    A useful analysis of issues of Sikh identity in the contemporary context is Gupta (1996).

  33. 33.

    On Punjab’s fiscal situation, see Sawhney (2014) and Sen (2014).

  34. 34.

    For example, see Accenture (2014) for an overview of the Indian situation, including state-level case studies.

  35. 35.

    A discussion of such issues for India can be found in Nandi and Gamkhar (2013).

  36. 36.

    In particular, see Lall (2009a, b) for a discussion of Punjab’s groundwater problem and possible solutions.

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Acknowledgments

This chapter is based on my keynote address delivered at the international conference, Rejuvenation of Punjab Economy, held at the Centre for Development Economics and Innovation Studies, Punjabi University, Patiala, March 21–23, 2014. I am grateful to Professor Lakhwinder Singh, director of the Centre for the opportunity. I have also drawn on and expanded some of the ideas first presented in Singh (2013a, b).

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  1. Department of Economics, University of California, Santa Cruz, 1156 High Street, Santa Cruz, CA, 95064, USA

    Nirvikar Singh

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Editors and Affiliations

  1. Department of Economics, Punjabi University, Patiala, Punjab, India

    Lakhwinder Singh

  2. Department of Economics, University of California Santa Cruz, Santa Cruz, California, USA

    Nirvikar Singh

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Singh, N. (2016). Breaking the Mould: Thoughts on Punjab’s Future Economic Development. In: Singh, L., Singh, N. (eds) Economic Transformation of a Developing Economy. India Studies in Business and Economics. Springer, Singapore. https://doi.org/10.1007/978-981-10-0197-0_21

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