Punjab Woos New Investors; but Faces Flak from Existing Ones - The New Indian Express

Punjab Woos New Investors; but Faces Flak from Existing Ones

Published: 21st December 2013 04:56 PM

Last Updated: 21st December 2013 04:56 PM

Despite carrying pro-farmers image, the Shiromoni Akali Dal-Bharatiya Janata Party government in Punjab managed to woo industry by rolling out red carpet for investors and offering "unprecedented" tax incentives during the year.

The state hopes to attract investment proposals worth over Rs 65,000 crore firmed up during the maiden two-day Progressive Punjab Investors Summit towards the end of 2013.

Already facing "dismal" financial position, Punjab government?s efforts to mobilise additional revenue through higher property tax, introducing anti-tax evasion measure E-Trip and levying advance tax on a host of commodities came under fire from a large section of state industry.

The trading community termed such moves as "harsh" and "unjustified".

One of election promises of turning state into power surplus came to near realisation as Punjab saw commissioning of two coal-fired thermal power plants?Talwandi Sabo (660 MW) and Rajpura thermal power plant (700MW) towards the end of the year, albeit after failing to meet several deadlines.

As far as neighbouring Haryana state is concerned, the Bhupinder Singh Hooda government, sensing slower pace of investments into SEZ projects, came with a new policy in the mid of the year.

It decided to allow SEZ developers to convert their projects into industrial colonies or cyber cities with a clear intention to provide relief to them.

On the agriculture side, wheat procurement from Punjab and Haryana dipped by a whopping 30 per cent on account of adverse impact on crop output due to inclement weather conditions near the time of harvesting.

However, basmati growers saw their income growing because of good export demand.

Aiming to bring down area under water-guzzling paddy crop, both Punjab and Haryana laid emphasis on encouraging growers to diversify into less water consuming crops like maize, sugarcane, agro-forestry, oilseeds, vegetables,pulses etc.

Armed with a new industrial policy which promises to offer a host of fiscal sops to new investments, the Punjab government presented the state as best investment destination in terms of infrastructure, skilled manpower, energy, among other things.

It managed to bring a galaxy of country?s leading corporates including RIL Chairman Mukesh Ambani, steel cazar L N Mittal, Airtel Chief Sunil Bharti Mittal, ITC Chairman Y C Deveshwar at its investors summit in December.

Among major investments, Mukesh Ambani and Sunil Mittal, who showered praises on state government?s efforts, promised to invest Rs 2,500 crore and Rs 4,000 crore respectively on digital infrastructure in the state.

"It is commendable that Punjab government took up an initiative to invite industry to invest in the state for the first time.

"But what is now important will be for the state government to live up to the expectations (like faster clearances, cheap power) of corporates who committed their big ticket investments in the state," said Ludhiana based industrialist Satish Dhanda.

Punjab government inked MoU of more than Rs 65,000 crore with companies in various industrial verticals including textiles, real estate, agro-processing during the investors summit.

The beginning of the year saw the SAD-BJP led state government?s first move towards improving the situation of "empty coffers" as the state government levied entry tax on vehicles bought from other states and Union Territories (UT).

State officials claimed that the state was losing tax revenue of Rs 125 crore per annum due to lower VAT rates on vehicles prevailing in other states.

The precarious fiscal health of Punjab government came to the fore when Punjab Finance Minister Parminder Singh Dhindsa presented the budget in March, wherein state?s debt was projected to cross over Rs 1 lakh crore, drawing ire from various quarters including political opponents.

Facing fiscal crisis, the Punjab government even could not spend 100 per cent of its annual plan amounting to Rs 14,000 crore for 2012-13, its second successive miss, though state government blamed Centre for its step-motherly treatment.

On the contrary, the neighbouring Haryana state performed well vis-a-vis Punjab in terms of key parameters including fiscal deficit, tax mobilisation and debt.

Facing elections next year, the Haryana government proposed to come out with a new housing policy for Economic Weaker Section (EWS), involving capital outlay of over Rs 1,600 crore.

This is to provide housing accommodation to about 3.5 lakh economically backward beneficiaries in urban and rural areas in the state.

In the month of April, power got costlier in Punjab by over 9 per cent across all categories even as power regulator introduced 'time of day' tariff for the first time in the state whereby a rebate of Rs 1 per unit on normal tariff would be given to the industry for consuming power during off peak hours.

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