Haryana, traditionally known for its agriculture
sector, has the 13th largest economy in the country. The state reported Gross State Domestic Product (GSDP) of around Rs 7.07 trillion (around $100 billion) at current prices in FY19, up 12.9 per cent. At constant 2011-12 price, the state GDP was up 8.2 per cent last fiscal to Rs 5.26 trillion, according the state economic survey for FY18-19.
This is ahead of the national economic growth. The all India GDP was up 11.2 per cent at current prices last fiscal and 6.8 per cent at constant prices. All the three key sectors in the state—agriculture, industry and services — grew faster than the national average.
The state’s economy is now driven by the services (50.2 per share in GDP in FY19) followed by industry (with 32.3 per cent share) last fiscal. Manufacturing, a sub-sector of industry, accounted for 23.9 per cent of the state’s economy last fiscal, which is higher than the national average of around 17 per cent.
A long-term study of the state economy by rating agency CARE suggests growth stability over the last 10 years. “Agriculture
sector has done relatively well in the state in recent years compared to national average, while there has been a slowdown in the industrial sector,” says Madan Sabnavis, head economist at CARE Ratings.
He attributes this to the historically developed nature of the state’s farm sector and its minimal dependence on monsoon rains unlike many states. “Farming in the state is driven by canal irrigation, greatly reducing the farmers’ dependence on monsoon rains to drive farm output,” says Sabnavis.
The farm sector grew at an average rate of 2.5 during FY15-19 period similar to the growth in the previous block of five-years.
The state, however, witnessed a slowdown in the non-farm sector, with industrial growth moderating to 5.5 per cent on an average during FY15-19 from 7.5 per cent during the FY10-14 period. The growth in services sector decelerated to 10.7 per cent on an average during FY15-19 from 11.3 per cent during FY10-14 period.
Slowdown in the non-farm sector could be the key reason for the recent surge in unemployment in the state that now stands at 42 per cent in urban areas, among the highest in the country.
The situation is likely to worsen with the recent slowdown in the automotive sector. The state tops the charts for passenger cars, two-wheelers and their component production and is home to companies such as Maruti Suzuki, Hero MotoCorp and Honda Motorcycle & Scooters India.
Fiscal deficit under control
Public finances in the state have been stable with fiscal deficit to GSDP below the mandated 3 per cent since FY11. However, there has been a sharp increase in the quantum of revenue deficit that increased to average of Rs 10,000 crore during FY15-19 compared to around Rs 3,000 crore on an average during FY10-14 period.
The debt to GSDP ratio has been within the stipulated 25 per cent target set out by the 14th Finance Commission, though it increased from 15.1 per cent in FY14 to 22.2 per cent in FY19. The state’s fiscal situation could worsen in mid-term as Haryana
has seen one of the sharpest declines in state goods & service tax collection during the first six-months of FY20.
The state, however, remains one of the top investment destinations in the country, thanks to its strategic location in the National Capital Region — one of the biggest consumer markets in the country. New investment projects in the state were up 68 per cent totalling Rs 4.1 trillion FY15-19 period compared with Rs 2.4 trillion in FY10-14. However, stalled investments in the state more than doubled to Rs 3 trillion during FY15-19 from Rs 1.2 trillion during FY10-14 period.
The new government that will assume charge has its task cut out — to use the stability of the state’s farm sector to scale-up the non-farm sector and create more jobs.