PM-Economic Advisory Council paper: Haryana surpasses Punjab in GDP share, per capita income
Punjab’s GDP share grew during the 1960s, mainly due to the Green Revolution, but then plateaued at around 4.3% until 1990-91, shows report.
Punjab’s share in India’s GDP and relative per capita income has declined since 1991, while neighbouring Haryana, which once lagged behind, has surpassed it on both economic indicators, according to a working paper by Economic Advisory Council to the Prime Minister (EAC-PM).
The paper ‘Relative Economic Performance of Indian States: 1960-61 to 2023-24’, authored by EAC-PM member Sanjeev Sanyal, said that Haryana’s share of gross domestic product now exceeds that of Punjab, and its relative per capita income has reached 176.8% in 2023-24 compared to Punjab’s 106.7%. Punjab and Haryana, which were once part of the same state, have experienced diverging economic trajectories.
It said that in 1960-61, Punjab’s share of GDP was 3.2%, while Haryana’s was 1.9%. “Punjab’s GDP share grew during the 1960s, mainly due to the Green Revolution, but then plateaued at around 4.3% until 1990-91. It began to decline thereafter, finally reaching 2.4% in 2023-24,” the paper said on Tuesday. In comparison, Haryana showed robust performance and its share continued to climb, going to 3.2% in 2000-21 and then pipping Punjab in 2010-11.
“Haryana’s share in India’s GDP was 3.6% in 2023- 24,” it said, adding, “It is likely that the success of Gurugram accounts for some part of Haryana’s increasing share.”
Pointing out that similar trends were seen in terms of relative per capita income, the paper said that Punjab, after witnessing rapid increase in per capita income levels following the Green Revolution in 1960s, did not keep pace with the national average. It said that over time, Punjab’s economic trajectory diverged completely from Haryana. “Punjab’s relative per capita income rose from 119.6% of the national average in 1960-61 to 169% in 1970-71, but then declined to 146.1% by 1980-81. It remained relatively stable at these levels until 2000-01, after which it began to decrease again. Overall, apart from the increases seen post green revolution, the state has not seen any other push to per capita income levels (or even GSDP growth),” it noted.
The per capita income of Punjab was 106.7% percent of national average in 2023-24, even lower than what it was in 1960-61.
In contrast, Haryana, also a beneficiary of the Green Revolution, saw its relative per capita income increase from 106.9% in 1960-61 to 138.5% in 1970-71, and then remaining at similar levels until 1990-91. The paper further noted that post-economic liberalisation, Haryana’s relative per capita income began to rise rapidly, reaching 176.8% in 2023-24. Today, Haryana has the fourth-highest relative per capita income among major states, following Delhi, Telangana, and Karnataka.
The paper said, “This raises an interesting question: Did Punjab’s focus on agriculture contribute to a form of ‘Dutch disease’, hindering its transition to industrialisation?” In economics, ‘Dutch disease’ is a phenomenon where the rapid development of one sector of the economy (particularly national resources) precipitates a decline in other sectors. The EAC-PM paper also said that the stark contrast between Haryana and Punjab warrants further investigation to understand its policy implications.
