AGRICLUTURE Real growth stems from real reforms, not inaction. The success of Mizoram and Himachal Pradesh validates the principle that sustained reforms and investment in health and infrastructure bring investments that create jobs and markets enabling prosperity. This year the State of the States study reviewed the performance of states since the 1991 reforms. The surprise overall winner is Assam, which has moved from number 17 in 2006 to number 13 this year. This, despite the geographical constraints and political problems that plague the state. Politicians and political parties also tend to believe that headline-grabbing investments and big-bang policy announcements are the answer to the problems of a state. Yes, investments do help when they happen within time and big-bang reforms also create the environment for optimism. But, as with most things in life, the devil is in the small print and is about getting the basic tenets of governance right. It may sound tedious and old-fashioned but this is the bitter pill that the CEOs of the states must bite, if every inch of the country has to reflect the India Story. PRIMARY HEALTH INVESTMENT ENVIRONMENT RANK 1: PUNJAB Robust fundamentals Best overall since 2003 Best in Agriculture, Consumer Markets, and Infrastructure since 2003 Best in Macro Economy There's a disquieting pattern to Punjab's paradoxical model of development. With its current growth rate of 6 per cent compared to the nation's robust 9 per cent, the state, which was the most prosperous in the 1970s, is now the second slowest growing economy. Its long-held claim to highest per capita income is history and the honour now rests with its one-time poor cousin Haryana. Worse, its human development indices in education and health are comparable only to some of the most backward states. Yet, if Punjab is clinging to the No.1 status in the overall development matrix, it is a result of the interplay of its historically strong fundamentals in agriculture, infrastructure, consumerism and resilience of its private sector. Exemplifying such spirit is the way Punjab farmers have lately switched to laser levelers-a technology for field-levelling that ensures higher yields. While the '80s and '90s lost to militancy, poor governance, brazen populism and bureaucratic sloth and corruption pushed the state into a leader-to-laggard syndrome, the rulers have been borrowing recklessly to support a litany of doles. PRIMARY EDUCATION The debt burden has ballooned to Rs 56,688 crore, roughly half of the GDP. While the subsidy bill is pegged at Rs 4,800 crore a year, the interest on debt is eating another Rs 5,000 crore. The kitty is now left with no capital investment for education, health and service delivery. The debilitating effect is evident in the poor standards of government schools, which are hamstrung by 32,000 vacancies of teachers. "The state is losing an opportunity to put its resources into the social sector," says Finance Minister Manpreet Singh Badal, who has been making a case for a partial rollback on subsidies but has cut no ice with Chief Minister Parkash Singh Badal. Unlike the government sector, private enterprise is booming-as reflected in rising consumption levels. Also, powering the economy are NRI remittances worth $2-3 billion a year. What has also helped is the fresh surge in real estate and VAT collections, which have grown by 44 per cent in six months. Agriculture remains the state's growth engine, accounting for 40 per cent of the GDP. While the service sector is growing, manufacturing has been stagnant in the absence of fresh investments and because of expensive land, power shortages and tax holiday concessions. "The tax waiver has been a double-whammy for Punjab," says S.S. Channy, secretary, industries and commerce, referring to the flight of 160 units to neighbouring states. At the same time, there has been a rash of investments in big-ticket infrastructure, retail and housing projects. INFRASTRUCTURE Projects worth Rs 1 lakh crore as part of Shiromani Akali Dal President Sukhbir Singh Badal's strategy are on a roll. They include the international airport at Mohali, two express highways, three five-star hotels, three dozen flyovers and bridges at the cost of Rs 25,000 crore. There is a plan to make Punjab power surplus by 2011 with four thermal power projects. Also on the anvil is a Rs 3,200-crore project for remodelling its canal system. With such tidings, the state can only look to regain lost glory.