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Industrial Development & Economic Growth in Punjab

March, 2018

Punjab, one of the northernmost states of India, is bordered by the Pakistani province of Punjab to its west, Jammu & Kashmir in the north, Himachal Pradesh in the northeast, Haryana in the south and southeast, and Rajasthan in the southwest.

Punjab is also known as the ‘Bread Basket of India’ and led to the first Green Revolution in the country. By 2025, it is expected that the state will be among the leading producers of non-food grains as well as exporter of various agri-products. Occupying only 1.5 per cent of India's geographical area, the state accounts for about 17 per cent of the country's wheat production and 11 per cent of rice production. This makes it suitable for agro-based industries, dairy farming and products, and other food processing industries. During 2016-17, total vegetable production in the state was 4.64 million tonnes, wheat production stood at 17.60 million metric tonnes, and rice production stood at 12.64 million metric.

Punjab has strong agriculture base with the huge production of principal crops. In 2016-17, production of sugarcane was recorded at 7,252thousand metric tonnes. Punjab has been ranked first in India in terms of infrastructure facilities offered. Punjab’s road, rail and air transport network, connectivity, construction of bridges and infrastructure facilities are rated among the best.

Punjab has emerged as a key hub for textile-based industries including yarn, readymade garments and hosiery. With the development of apparel parks, favourable textile policy and other incentives for the creation of textile infrastructure, the state offers opportunities for investment.

In 2016-17, Punjab’s gross state domestic product (GSDP) was US$ 66.4 billion at current prices, as against US$ 41.4 billion in 2011-12. The state’s GSDP grew at a compound annual growth rate (CAGR) of 9.92 per cent between 2011-12 and 2016-17.Punjab’s net state domestic product (NSDP) at current prices was US$ 59.7 billion in 2016-17 as against US$ 37.1 billion in 2011-12. Between FY12-17, NSDP increased at a compound annual growth rate (CAGR) of 9.95 per cent. The state provides investment opportunities in sectors such as textiles, agro-based industries, IT &ITeS, automotive and auto components, sports goods and light engineering goods.

The following are some of the major initiatives taken by the government to promote Punjab as an investment destination:

  • Development of infrastructure in rural areas with allocation of US$ 232.82 million.
  • The 'Industrial and Business Development Policy-2017 has been approved to give a boost to economic activity in the state.
  • The state government aims to achieve a target of 4,200 MW capacity additions in solar energy by 2022. As of January 2018, 1,287.31 MW was contributed by the renewable energy sources (RES).
  • The Government of Punjab proposed plans of achieving 300 megawatts (MW) of power generation using biomass by 2022. In addition, the state government is also planning to set up biogas CNG projects in all districts of the state.
  • Under the Urban Infrastructure and Governance (UIG) programme, five additional projects have been sanctioned and are in the transition phase. Some of the key areas of development are roads and flyovers, water supply, sewerage and solid-waste management.
  • The state's textile policy provides incentives such as development of clusters, benefits under the central government's Technology Upgradation Fund Scheme (TUFS), electricity at reduced rates, and government support in the acquisition of land for textile mills.

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