The industry in Punjab is languishing due to obsolete infrastructure and excessive burden of taxes. This is reflected in the statistics available at the Industries Department that shows the number of small-scale units has come down from 2.25 lakh to 1.69 lakh in the past five years.
Sources in the department disclosed that many of the existing units were working below capacity and were not profitable for the owners. According to Bhagwan Bansal, Punjab Cotton Factories and Ginners Association, "When states like Gujarat and Madhya Pradesh are organising global meet to mobilise foreign investments, Punjab government is sitting on the fence".
He added that Chief Minister, Prakash Singh Badal was busy doing Sangat Darshan in different parts of the state as an image building exercise but the industry associations are not given the attention.
He proposed the Chief Minister should meet representatives of the important clusters (Cotton cluster of Bhatinda, Sorts Goods and Rubber cluster of Jallandhar, Basmati cluster Amritsar, Cycle parts cluster at Ludhiana and Steel cluster at Mandi Gobindgarh) to review the policies of the state government.
“Punjab is the only state in the country that imposes exorbitant 2 per cent market fees on agriculture commodities where as it ranges between 0.5 per cent to 1% in other states. The rural infrastructure development fund of 2 per cent is charged only in Punjab. The state charges 4 per cent CST on inter-state transactions, where as it is charged 2 per cent elsewhere.” Despite a good demand, he said, our products become uncompetitive in the domestic market due to high taxation.
Amarjit Goel, the Chairman of Modern Steel Limited and past president of PHD Chamber of Industries said that the present government is quite inaccessible for the industries. The industry is paying through its nose the power tariff at 5.80 per unit. It is highest in the country.
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He added that the unbinding of the Punjab State Electricity Board has accentuated the problems of the industry. Supply constraints remained the same but the burden of taxes has increased by putting taxes like electricity duty on open access of power and cross subsidy by the State Power Corporation Limited on wheeling of power.
The growing component of wages in the variable costs has pushed some players to invest in mechanisation. But the deficit in power supply does not help them in full capacity utilisation despite mechanisation.