Indian states: left behind

A new IMF working paper by Catriona Purfield examines how growth has varied across India's states, finding large and persistent gaps: Mind the Gap - Is Economic Growth in India Leaving Some States Behind?

This paper...finds that (i) the income gap between rich and poor states has widened; (ii) rich and faster-growing states have been more effective in reducing poverty; (iii) poor and slower-growing states have had little success in generating private sector jobs; (iv) labor and capital flows do little to close income gaps; and (v) the volatility in economic growth is greatest in poor states. Differences in states' policies affect the cross-state pattern of growth. Greater private sector investment, smaller governments, and better institutions are found to have a positive impact on growth.

The recent Guardian magazine article by Raekha Prasad on Bihar state, A backward glance, makes this point in stark terms: "Lawless, feudal, destitute, desperate: in modern-day India, Bihar embodies the gulf between dreams and reality." It's grim reading. Here is a small excerpt:

"Bihar was not so different from the rest of India when you last visited," my uncle says. In the intervening years he has watched time unravel reform. Healthcare, schools, drinking water and roads have regressed, he says. State hospitals don't have medicines or operating facilities; schools don't have teachers because they haven't been paid for months. The electrical factories, mills and pharmaceutical companies have closed down or moved elsewhere. The only growth area is private schools and clinics, for the few who have prospered.

For my uncle, most tragic of all is the criminalisation of Bihar's politics, where elections are won by a show of brute strength. The reservations he implemented were intended to create a more just society but, unwittingly, bestowed caste categories with political identities. Politicians from low-caste backgrounds boast of their "backward" origins, building constituencies through unashamed pledges of favouritism.

Comments

[Aninda Mitra]

See the article on malnutrition in India's BIMARU states in the FT today (May 17). The media and government are caught up in the frenzy of the stock market, bollywood, IT prowess. Meanwhile, 1/4th of the country is worse off than sub-saharan africa.