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State Development Monitor

May 2015 1

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May 2015


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SDM Newsletter States have marked significant developments in all the spheres. RBI released its report on state finances recently. The report is an assessment of the finances of state governments and provides an analysis on the fiscal position of the state governments. The report also throws light on the changing dynamics of fiscal federalism over the years. The theme of this year’s report is ‘Fiscal Consolidation: Assessment and Medium Term Prospects’. The report has highlighted several issues of significance and concern which are likely to have implications for state finances in the immediate to medium-term. Renewed efforts by states towards fiscal consolidation in the years following the global financial crisis would need to be motivated by sustained efforts to increase states’ own revenues have been discussed. Also much stress was laid on the freeing up resources for higher capital outlays, improving the quality of fiscal consolidation and setting the consolidated debt-GDP ratio of the states. The rapidly growing e-commerce is also discussed in detail as it could contribute to states’ own revenue efforts, provided there is greater clarity in rules and procedures to enable better compliance. On economic front, the World Bank has approved $50 million to improve skills training programmes in priority growth sectors in Punjab. On agricultural front, Wheat procurement by government agencies during current Rabi marketing season is reported to be 5 lakh MT more than the last season’s procurement. About 267, 06, 313 MT wheat has been procured by the government agencies in various wheat growing states which was 262,86,152 MT during the last period. Further, Hon'ble Punjab tourism and culture minister Shri Sohan Singh Thandal announced recently that the Punjab government will spend Rs 100 crore on the maintenance and repair of the heritage sites and historical monuments in the state. Going ahead, the state of Haryana and the Union Territory of Chandigarh are expected to announce their Industrial Policy. We look forward to significant reform measures by respective governments that would bolster industrialization in the coming times.


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Index Page Economic developments 5 Rural economy: Agriculture & agri business developments 6 Infrastructure developments 7 Tourism developments 8 Health developments 9 Summary of economic indicators northern & central states

of India 11

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1.1 Punjab

World Bank approves $50million for skills training in Punjab-The World Bank has approved $50 million to improve skills training programmes in priority growth sectors in Punjab as part of a project aiming to improve the quality, labour market relevance and access to the training programmes. The focus of the initiative is on the employability of graduate trainees. Punjab Skills Development Project would benefit individuals in the labour force who wish to gain job specific skills and training in order to join the labour market.

German company to help renewable energy sector in Punjab- Punjab and Germany will soon collaborate to create 'Renewable Energy Equipment Hub’. Indo German Energy Programme has proposed to facilitate linkage between Punjab and German Renewable energy sector. The initiative would help in better utilization of the renewable energy and would also lead to better cooperation between the concerned countries.

Punjab farm machinery units hit by unseasonal rain-Unseasonal rainfall in March and April has hurt the prospects of over 2,000 units in Punjab engaged in the manufacture of farm machinery and components, whose sales had already gone into a decline by 30-40% over the past year. Manufacturers in Punjab also want the government to set up a R&D centre to facilitate the upgradation of agricultural machinery, to boost both farm machinery sales and food production.

Rs 1,400 crore ‘fee’ burden; petrol, diesel dearer in Punjab- Punjab government has decided to levy various fees and taxes to mop up additional revenue of Rs 1,400 crore annually. In light of this petrol, diesel, electricity, sugar as well as registration of property will now cost more.

1.2 Madhya Pradesh

MP to de-notify two wildlife sanctuaries for sand mining- In order to check illegal mining of sand and augment its availability at cheaper prices, the Madhya Pradesh government plans to de-notify an area of 100 sq km at Son Ghariyal sanctuary in Sidhi district and National Chambal Gharial Wildlife Sanctuary, Morena. The de-notification of these areas would not only protect nearby wildlife habitat but would also increase availability of sand quantity in the state. 1.3 Jammu and Kashmir

Jammu and Kashmir unlikely to implement GST - Hon’ble state finance minister of Jammu and Kashmir said that it is unlikely that the state would implement the GST regime as it will take away its authority of legislating on taxes. 1.4 Chhattisgarh

Chattisgarh announces 6% DA hike for employees-Chhattisgarh government recently announced a 6% increase in the Dearness Allowances (DA) for its employees that include regular staffers and pensioners. The hike would be implemented with retrospective effect from January

1. Economic developments


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1, 2015 and will apply to employees in local administration, teaching and non-teaching staff in government-aided educational institutions, village assistants, anganwadi workers

2.1 Soybean, chana prices go up; Maharashtra, MP, Rajasthan farmers relieved- Soyabean prices have appreciated 16% in the spot market in the past one month while chana prices are at 20% higher than last month. In view of this the farmers are holding back their stocks and are releasing in small quantities so that they can get good prices. The Soybean Processors' Association (SOPA) has pegged soybean production at 100 lakh tonne this year, compared to 94.76 lakh tonne last year. 2.2 Bihar Central Government demands bonus for wheat farmers in Bihar- A bonus of Rs 300 per quintal on wheat procurement from the farmers have been asked by the central government to help them overcome loss of rabi crop. State government are also demanded to be lenient in wheat procurement from farmers and provide bonus for the wheat grains having 50 % shine or less as the Centre has relaxed norm in this regard for this rabi season. State Food Corporation (STF) are also asked to pay Rs 977 crore to the farmers in lieu of procurement of their harvest. Higher onion acreage may keep prices stable- Eastern states like Bihar, West Bengal and Odisha have increased onion production which is helping meet the shortfall. Despite forecasts of below-average rain this year, prices are currently expected to behave normally, as the eastern states are promoting sowing of onion this season. Sowing in these states could go up by 10-20%, depending upon the monsoon. 2.3 Madhya Pradesh Wheat procurement in full swing despite no-bonus season- Madhya Pradesh has so far procured 5.5 million tonnes of wheat despite this being a no-bonus season for farmers. It is expected that the wheat procurement would cross seven million tonnes this year as well. Wheat procurement from MP up 15%- Madhya Pradesh has procured 7.26 million tonne of wheat retaining second slot in procurement while Punjab remains the top wheat procuring state in India. Bhopal district has procured the highest quantity, at 1.7 mt, while Umaria has procured 1,160 tonne at minimum support price of Rs 1,450 a quintal.

2.4 Haryana Haryana procures 66.26 lakh tonnes wheat- Over 66 lakh metric tonnes of wheat have so far been purchased in various grain markets of Haryana which is 2 lakh metric tonnes more than the corresponding period last year. The purchase of wheat has been made at 378 mandis and purchase centres in the state and payment upto 99.57% has been made to the farmers. Government has also kept in view the interests of the labourers and increased their rate of labour in grain markets from Rs 2 per kg to Rs 2.5 per bag.

2. Rural economy: Agriculture & agri business developments


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Haryana to distribute crop compensation by May 15- Haryana Hon’ble Finance and Revenue Minister Captain Abhimanyu reported that 500 special village accountants have been appointed for distribution of compensation cheques to farmers. Further, it would also be ensured by the government that farmers get compensation before May 15 without facing any hassles. Food Corporation of India to sell wheat in open market in Punjab & Haryana from June-To liquidate surplus stocks and improve supply in the open market, the government has decided to sell FCI wheat to bulk consumers from June in Punjab and Haryana, while from July in other wheat growing states. 2.5 Jharkhand

Jharkhand to strictly enforce Prevention of Cow Slaughter Act- Government of Jharkhand has enforced the Prevention of Cow Slaughter Act, 2005, to stop cow slaughter and sale of beef in the state along with a complete ban on smuggling of cows. 2.6 Jammu and Kashmir

J&K's net sown area much lower than national average: NABARD- NABARD has reported that the Net sown area in Jammu and Kashmir is at 37.6% which is lower than the national average of 46%. According to the bank, only 42% area is under irrigation and around 90% of the available ground water is unutilized. 2.7 Chhattisgarh

Chhattisgarh plans roadmap for organic farming- The Chhattisgarh government plans to prepare a roadmap by the end of this year to promote organic farming in the state. The roadmap will include a time-bound strategy to expand this kind of farming across the state and will be prepared within next six months. The government's target is to develop the Naxal-affected Dantewada district as an organic farming district.

3.1 Chhattisgarh

Chhattisgarh writes to Odisha for speeding up Indrawati structure work- Chhattisgarh government has demanded that the Odisha State Government should speed up the work for the early completion of Hydraulic Control Structure on Indrwati-Jhora canal. The structure would prevent the waters of the river from flowing back to Odisha.

3.2 Jammu and Kashmir

J&K Hon’ble Chief Minister Shri Mufti Mohammad Sayeed for setting up hi-tech industrial estates in state- Jammu and Kashmir Hon’ble Chief Minister Shri Mufti Mohammad Sayeed recently laid emphasis on the need for building a land bank for setting up hi-tech industrial

3. Infrastructure developments


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estates to attract investment and absorption of technically-skilled workforce in the state. 30-acre Industrial Estate is being established at Vessu in Kulgam district of the state.

3.3 Jharkhand

Coal Ministry signs MoU with government of Jharkhand for coal evacuation Joint Venture- The Ministry of Coal has recently signed a tripartite memorandum of understanding (MoU) with state government of Jharkhand and Ministry of Railways to facilitate efficient evacuation of coal from North Karanpura coalfield area of Central Coalfields Limited with an authorized share capital of Rs 1,000 crores. The development of the corridors shall be implemented either through the proposed JV or through separate project-specific joint venture companies. The Joint Venture also extends for construction of railways sidings under the Tori-Shivpur-Kathotia railway line.

3.4 Bihar

Massive rural electrification project in progress- A massive rural electrification project is in progress in Bihar under the ambitious Deendayal Upadhyaya Gram Jyoti Yojana. The prime objective of this scheme is to provide electricity to the rural people of the state. Under this scheme, villages having at least thirty households will be electrified. The scheme will benefit both Above Poverty Line (APL) and Below Poverty Line (BPL) families equally. The major component of the scheme is separation of agriculture and non-agriculture feeders to supply electricity to agricultural and non-agricultural consumers in the rural areas.

4.1 Punjab Punjab to spend Rs 100 core on maintenance of heritage sites- Hon'ble Punjab tourism and culture minister Shri Sohan Singh Thandal announced recently that the Punjab government will spend Rs 100 crore on the maintenance and repair of the heritage sites and historical monuments in the state. He also mentioned that the construction of memorial to Guru Ravidas Ji would be started at Khuralgarh in Hoshiarpur soon. Punjab government and Shiromani Gurdwara Prabandhak Committee (SGPC) had already assigned the duties to the concerned employees adding that there would be no shortage of funds for the celebrations. 4.2 Hiamchal Pradesh Himachal to move NGT over ban on tourist vehicles at Rohtang Pass- Himachal Pradesh Chief Minister Virbhadra Singh recently said the state government would urge the National Green Tribunal (NGT) to reconsider the ban imposed on plying tourist vehicles on Rohtang Pass.

4. Tourism developments


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5.1 Bihar Supreme Court stays High Court order against ban on tobacco products in Bihar- The ban on all smokeless tobacco products is set to be back in Bihar with the Supreme Court recently staying the Patna high court's interim order against the ban. When the ban was challenged in the Patna high court, the state government had contended that similar matters pertaining to other states were pending in the apex court. 5.2 Chhattisgarh Chhattisgarh to outsource doctors, teachers for Naxal-infested regions- It had been decided by the Chhattisgarh government to outsource doctors, teachers and para-medical staff to work in the pockets that had been infested with the activities of the Naxalites. The officials said the new system of outsourcing would help to get specialized doctors and subject teachers that were required for the interior areas. Though the authorities had been managing medical practitioners and teachers, but they are not expert on the issue.

5. Health developments


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Summary of economic indicators of Northern & Central states of India

Source: PHD Research Bureau, compiled from various sources RR: Revenue Receipts, GFD: Gross Fiscal Deficit Note: 1: Data Pertains to FY15 2: Data Pertains to Census 2011 3: Data Pertains to FY14 (BE), Negative (-) sign indicates surplus 4: Data Pertains to FY14 (BE)

Macro-Economic components Bihar Chattisgarh Delhi Haryana HP J&K

Real GSDP (Rs. bn)1 1897.89

1008.42

2361.6 1996.56 472.54 454

Geographical Area (Sq Km) 94163 136034 1483 44212 55673 222236

Population Size (mn) 2 101 26.5 17.6 26.5 70.4 12.1 Economic Growth 1 9.5 5.9 9.4 6.9 6.2 5.2 State GSDP as % of India’s real GSDP 3 3.5 1.9 4.2 3.9 0.8 0.9 Per-capita Income (Rs) 1 16801 29047 127667 67260 54494 31054 Growth of Agriculture Sector 1 4.4 2.7 3.2 3 13.4 4.9

Growth of Industry Sector 1 9.1 4.7 1.3 4.4 2.4 1.2

Growth of Services Sector 1 11.2 8.6 10.3 9.4 6.8 7

Value Added by Agriculture Sector 1 19.7

19.2

0.6

15.1

18.6

20.0

Value Added by Industry Sector 1 22.9 39.1 9.2 27.0 38.0 23.5 Value Added by Services Sector 1 57.4 41.8 90.2 58.0 43.3 56.5 Literacy Rates (%) 2 63.8 71 86.3 76.6 83.7 68.7 RD/ GSDP 4 -2.7 -0.03 -0.04 0.01 -3.51 -0.12 GFD/ GSDP 3 3 0.05 -0.01 0.05 0.05 0.05 Debt/ GSDP 4 23.3 14.6 6.5 18.4 38.8 53.8

Macro-Economic components Jharkhand MP Punjab Rajasthan UP Uttarakhand

Real GSDP (Rs. bn)1 1094.08 2535.3 1732.21 2474.3

4923.83

775.52

Geographical Area (Sq Km) 79714 308000 50362 342239 240928 53484 Population Size (mn) 2 32.6 75.15 30.3 70.5 209.8 10.3 Economic Growth 1 8.9 10.2 5.2 4.8 6 9.3 State GSDP as % of India’s real GSDP 3 1.8 4.7 3.2 5.3 9.1 1.3 Per-capita Income (Rs) 1 28882 29218 49411 31836 20057 63820 Growth of Agriculture Sector 1 8.3 18.8 0.44 5.2 4.2 5.12

Growth of Industry Sector 1 6.0 4.5 2.5 1.1 1.9 12.3 Growth of Services Sector 1 11.6 8.1 8.9 7.2 8.3 7.8 Value Added by Agriculture Sector 1 15.6 29.0 20.8 20.3 22.0 9.6 Value Added by Industry Sector 1 39.7 25.6 28.7 28.5 21.5 38.5 Value Added by Services Sector 1 44.7 45.4 50.5 51.2 56.5 51.9 Literacy Rates (%) 2 67.6 70.6 76.7 67.1 69.7 79.6 RD/ GSDP 3 -0.28 -0.02 0.1 -0.004 -0.02 -0.01 GFD/ GSDP 3 0.04 0.05 0.05 0.05 0.05 0.05 Debt/ GSDP 4 20.7 23.9 33.5 24.5 33.2 25.6


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Research Team Dr. S P Sharma Chief Economist & Director of Research Ms Megha Kaul Senior Research Officer Ms Huma Saif Qazi Research Assistant

Disclaimer “State Development Monitor” is prepared by PHD Chamber of Commerce and Industry to provide a broad view of state level developments. This newsletter may not be reproduced, wholly or partly in any material form, or modified, without prior approval from the Chamber. It may be noted that this newsletter is for guidance and information purposes only. Though due care has been taken to ensure accuracy of information to the best of the PHD Chamber’s knowledge and belief, it is strongly recommended that readers should seek specific professional advice before taking any decisions. Please note that the PHD Chamber of Commerce and Industry does not take any responsibility for outcome of decisions taken as a result of relying on the content of this newsletter. PHD Chamber of Commerce and Industry shall in no way, be liable for any direct or indirect damages that may arise due to any act or omission on the part of the Reader or User due to any reliance placed or guidance taken from any portion of this publication.

Copyright 2015

PHD Chamber of Commerce and Industry ALL RIGHTS RESERVED. No part of this publication including the cover, shall be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of, and acknowledgement of the publisher (PHD Chamber of Commerce and Industry).


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PHD Research Bureau

PHD Research Bureau; the research arm of the PHD Chamber of Commerce and Industry was constituted in 2010 with the objective to review the economic situation and policy developments at sub-national, national and international levels and comment on them in order to update the members from time to time, to present suitable memoranda to the government as and when required, to prepare State Profiles and to conduct thematic research studies on various socio-economic and business developments. The Research Bureau has been instrumental in forecasting various lead economic indicators national and sub-national. Many of its research reports have been widely covered by media and leading business newspapers.

Team, PHD Research Bureau

Dr. S P Sharma Chief Economist & Director of Research

Macro Economy & Infrastructure Ms. Megha Kaul Sr. Research Officer Ms. Ekta Goel Research Associate

Foreign Trade & Investments Ms. Rashmi Taneja Sr. Research Officer Ms. Apurva Munjal Research Assistant

Financial Markets & Taxation Ms. Surbhi Sharma Research Officer

States & Socio Economy Ms. Huma Saif Qazi Research Assistant

Economy & Business Dynamics Ms Pallavi Mehta Research Associate

Ms. Sunita Gosain Secretarial Assistant


May 2015 14

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