3 Agricultural Growth and Industrial Development in Punjab

Punjab has achieved remarkable growth since independence and is now the richest state of India. This growth and prosperity are primarily the result of Punjab's adoption of new technology in agriculture. Its cultivators were the first to adopt the Borlaug seed-fertilizer technology during the mid-1960s, and within a few years the state became the symbol of a green revolution in India. From 1960/61 to 1987/88, the net state domestic product (NSDP) grew at 5.3 percent per year, compared with 4.3 percent for the country as a whole. Over this period, per capita income rose by 3 percent annually compared with 1.97 percent for India (India CSO, various years). Income from crop production grew at an annual rate of 3.6 percent and that from animal husbandry at a remarkably high rate of 7.3 percent (table 3.1). Punjab has also experienced labor force diversification. According to the forty-third round of the National Sample Survey (NSS), the share of Punjab's labor force in agriculture declined from nearly 60 percent in 1977/78 to 50 percent in 1987/88 (India 1990a). Unlike the rest of India, where the average per worker income in agriculture during 1987/88 was only 35 percent of the average income in the nonagricultural sector, Punjab recorded much the same per worker income in both the sectors, because of much higher productivity growth in its agricultural sector. The rapid growth of agriculture has had a large impact on the entire economy, especially the agroindustries that supply both current and capital inputs and that process agricultural produce. The emergence of large market surpluses in agriculture stimulated an unprecedented increase in trade and transport. And the rapid increase in the per capita incomes of the rural and urban population widened the market for consumption goods and services. In short, by raising the income of a large proportion of rural workers, rapid agricultural growth not only made a deep dent in rural poverty but also led to development of other sectors. Over the years, agricultural price policy helped Punjab fanners sustain and further develop new technology. The Agricultural Prices Commission (re-