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Is the Economic Growth Stagnant in Haryana?

Is the Economic Growth Stagnant in Haryana?, naya haryana, नया हरियाणा

4th July 2014

Naya Haryana

The answer would be yes. After years of growth, Haryana has seen a slowdown in economic growth in the state. The reasons can be attributed to a variety of reasons, namely, poor policy implementation, inefficient resource optimisation and labour unrest - all of which have contributed to the slowdown.

Since its inception, Haryana has traditionally been an agrarian economy and has made rapid strides in agriculture over the years. In fact, Haryana was the other state after Punjab that contributed significantly in ushering in the Green Revolution.

The last four decades has seen a shift from the state being predominantly agrarian to becoming a major state for the services sector. This along with rapid investments in the manufacturing and real estate sectors have seen the state make great strides in economic development. However, the state is witnessing a loss in momentum of economic growth.

In 1969-70, agriculture and allied sectors contributed 60.7% of the GSDP in the state. This share has now been reduced to 15% in 2013-14. This is in sharp contrast to the services sector which had a 21.6% share in 1969-70 but now commands a 58% share in 2013-14. However, the impact of the agricultural sector on the state's overall performance continues to remain significant.

It is in light of the above, that the recent Economic Survey 2013-14 shows that Haryana has reported negative growth in the farm sector and that along with a slowdown in other sectors, has weighed heavily in bringing down the GSDP for the state to 6.9% in the year 2013-14. 

The survey showed that at constant prices, the 6.5% GSDP growth in 2012-13, has been the lowest since 2007-08.

A closer look at the various sectors shows that the agriculture and allied sector posted a negative growth of 0.7% in 2012-13 (Quick Estimates). This is keeping with the trend of negative growth rate of 0.1% seen earlier in 2007-08 and 1.4% seen in 2009-10. The state has to modernise the agriculture sector and invest in food processing industry for value addition to its agriculture. Though the state has done well in terms of dairy and animal farming, there is a need to further enhance the per capita output in the sector, as well as increase the milk processing capacity.

Other sector slowdown is seen in manufacturing 3.8%, gas, water supply and electricity 5.1%, public administration 3.5%, construction 4.6%, and transport-trade-communication 5.6%.

The state has also seen major labour unrest especially in Maruti that led to Maruti establishing an alternate manufacturing site in Gujarat. This has been a major setback for the state given the fact that it was the setting up of Maruti factory in early '80s that catalysed the industrial development in the state. The state has by and large been free of extreme labour unrest, but this recent trend of violent protest can further impact Haryana's development unless adequate preventive measures are undertaken by the state.

Various scams are also undermining the gains of earlier years and rampant corruption is being reported in departments of the state government. Haryana as a state has had the advantage of being in close proximity to the capital, but unless the state government improves the quality and efficiency in its administration, the state will continue to stagnate. 



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