The overall economy of Punjab has shown a growth rate of 6.29 percent during 2003-04 (P) and 5.39 percent during 2004-05 (Q).

The Gross State Domestic Product (GSDP) at Constant (1999-2000) prices has been estimated during 2005-06 as Rs.84851.44 crores (Q) and the provisional estimates of GSDP for the year 2004-05 is as Rs. 81081.36 crores.

The GSDP from Primary sector which comprises of agriculture and allied sectors viz. livestock, forestry and fishing has increased from Rs.27543.45crores (P) in 2004-05 to Rs.28057.03(Q) crores during 2005-06 showing a growth rate of 4.77(Q) percent at constant prices as against 6.23 (P) percent in 2004-05.

The GSDP from the secondary sector which covers the manufacturing, construction and power sector has increased from Rs.18776.61crores(P)in 2004-05 to Rs.19836.75(Q) crores in 2005-06 showing a growth rate of 4.57 percent at constant (1993-94) prices, which is almost the same as was in the last year(2003-04).

The GSDP in tertiary sector which includes trade, transport, banking and insurance, real estate, public administration and other services sector has increased to Rs.36957.66(Q) crores in 2005-06 as compared to Rs.34761.50(P) crores during 2004-05 at constant (1999-2000) prices. Tertiary sector has a growth rate of 6.48 (Q) percent during 2004-05 as against a growth rate of 7.43 (P) percent during 2003-04.

The Per Capita Income at constant (1993-94) prices has been estimated at Rs. 16756 (R) during 2004-05 as against Rs.16119 (R) during 2003-04 registering an increase of 3.95 percent. The per capita income at current prices has been estimated at Rs. 30701(R) in 2004-05 as against Rs.28607 (R) in 2003-04 showing an increase of 7.32 percent.

The structural composition of the State’s economy has witnessed progressive changes since the base year 1999-2000. The share of agriculture (proper) sector in GSDP has declined from 26.27 percent in 1999-2000 to 22.15 (Q) percent in 2005-06. The share of primary sector which includes agriculture and livestock has come down from 37.53 percent in 1999-2000 to 33.06(Q) percent in 2005-06. The share of secondary sector has increased from 22.75 percent in 1999-2000 to 23.38(Q) percent in 2005-06 which is mainly due to increase in contribution from construction sector. The share of tertiary sector which comprises of services sector along with trade, transport, banking and insurance and public administration has increased from 39.72 percent in 1999-2000 to 43.56(Q) percent in 2005-06. This growth is mainly due to increase in contribution from transport, storage & communication sector and banking & insurance sector. It is evident from above analysis that structurally Punjab’s economy is following a good trend under which the share of agricultural sector in GSDP is declining and share of secondary and tertiary sectors is increasing. Diversifications of Wheat paddy rotation in the cropping pattern have already been initiated by the Govt. through contract farming.

The estimates of capital formation provide an indicator of the magnitude and growth of productive potential of the economy and these are also important in the context of planning and economic development. In Punjab, the Gross State Domestic Capital Formation (G.S.D.C.F) at current prices was Rs.13624 (P) crores during the year 2003-04. (The estimates of G.S.D.C.F. in Punjab for public and private sectors at current prices are Rs.4891 (P) crores and Rs.8733 (P) crores respectively during 2003-04. The major capital was formed by manufacturing sector to the tune of Rs.4748 (P) crores. The percentage share of manufacturing sector was 34.85 percent, trade hotels & restaurants was 18.51 percent and for agricultural sector was 14.39 percent during 2003-04 in the total G.S.D.C.F. The G.S.D.C.F was Rs.13134(R) crores during the year 2002-03.)

The total production of food grains has declined from 256.62 lakh metric tons in 2004-05 (P) to 251.80 lakh metric tons in 2005-06(P) showing an increase of 3.79 percent. This increase is mainly in production of crops of rice and wheat. The production of rice has declined by 2.33 percent in 2005-06 (P) over the previous year and the production of wheat has decreased by 1.37 percent in 2004-05 (P) over the previous year. The target of food grains production has been fixed at 242.38 lakh metric tons but likely achievement will be 253.36 (P) lakh metric tons during 2005-06. The production of cotton (American) has increased from 13.06 lakh bales in 2003-04(P) to 19.13 lakh bales in 2004-05(P) showing an increase of 46.48 percent.

Large and medium industrial units increased from 551 in 2003-04 to 562(P) in 2004-05 with a fixed investment of Rs. 21508 crores providing employment to 2.37(P) lakh persons with the production value of Rs.32610 (P) crores. The number of small scale units increased from 2.03 lakh in 2003-04 to 2.04(P) lakh in 2004-05 with the fixed investment of Rs.4835 (P) crores and providing employment to 9.34(P) lakh persons with the turnover of Rs.25095 (P) crores. It is expected that the number of small scale units will increase to 2.05(P) lakh with a fixed investment of Rs.4855(P)crores providing employment to 9.38(P)lakh persons with the production value of Rs.25200(P)crores during 2005-06.

Energy is one of the vital infrastructures for economic development of the State. With the object of meeting the demand for electricity in the State, the Government has been making higher allocation for this sector during annual plans. During 2007-08 a sum of Rs.1062.02 crores (20.78 percent) has been outlaid for energy, out of total plan outlay of Rs. 5111.00 crores. The installed plant capacity generation was 4626 MW in the year 2006-07. The total energy availability is expected to be 33487 million KWH during 2005-06 as compared to 32197 million KWH during 2004-05.

In Punjab, the wholesale price index of agricultural and industrial commodities (base 1979-80 to 1981-82=100) recorded an increase of 17.29 percent during 2006-07 as compared to an increase of 6.15 percent in 2005-06. The wholesale price index of primary articles prepared by the Government of India (base 1993-94=100), though not comparable with the state index, increased by 2.6 percent in 2004-05 as against an increase of 4.3 percent during the previous year.

The magnitude of un-employment continues to be a cause of serious concern in the state. The total number of job seekers registered with the employment exchanges in the state was 4.63 lakh as on 31.12.2005 however the number of job seekers with the employment exchanges as on 31.12.2004 was 4.76 lakhs. Government is implementing various self employment schemes through various departments/ corporations. Yet a lot needs to be done to tackle this problem.

To identify the sub sectors and activities in all sectors of economy where livelihood avenues can emerge, Govt. is conducting a study “Livelihood Strategies Across Sectors in Punjab”. The main objective of the study is to estimate the number of unemployed persons and prepare the profile of unemployed persons especially of women and the youth. The study will prepare an effective and feasible strategy to create suitable employment and livelihood activities in private services, manufacturing and farm and non-farm sectors of the state with special emphasis on the issues pertaining to women livelihood and youth employment.

The overall budgetary position had improved on revenue account. The revenue deficit on revenue account which was Rs.3390.55 crores during 2004-05 (A) decreased to Rs 1240.25 crores during 2005-06(A) and increased to Rs.2190.60(R.E) crores during 2006-07 (B.E). But the volume of this deficit is still very high. The receipts from the State’s taxes increased from Rs. 6148.54 crores in 2003-04(A) to Rs6885.00 crores in 2004-05(RE) and is likely to increase further to Rs.7876.01 crores in 2005-06 (BE). The government has embarked upon a number of corrective measures to reduce the fiscal deficit.