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Current Economic Statistics and Review For the
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Growth of State Economies and their Structural Changes*
The objective of this study is to compare economic performance across states using state domestic product (SDP) and per capita income and evaluating inter-state disparities in income growth, as also in structural changes of state economies. The data base for this study is contained in the EPWRF’s Domestic Product of States of India 1960-61 to 2006-07, (Second Updated Edition). No doubt, SDP estimates have their limitations, essentially because they capture income originating within a state boundary and not income accruing to residents of a state, unlike the estimates of gross domestic product (GDP) at national level. Even so, given the existing set of data, SDP, per capita SDP and the sectoral composition of SDP constitute the most crucial set of indicators to measure the economic performance of states and structural changes in their economies. The data base study under reference has helped us to discern a wide variety of analytical results. In this brief note, an attempt is made to highlight some key results. Vast Divergence in Growth Rates First, a striking feature that stands out in the results of the data base is that there is a mind-boggling variety of growth numbers that prevail in individual years for different states. Interestingly, the divergences in growth are also seen as between years in respect of individual states. For instance, in the year 2006-07 (for which information is available for all states), Bihar registered the highest growth rate of 20.3% followed by Haryana (11.4%), Maharashtra (9.7%), Gujarat (9.2%) and Andhra Pradesh and West Bengal (8.9% each). At the other extreme, Madhya Pradesh secured the lowest growth of 4.2% in the same year; other states to experience comparatively lower growth rates ranging from 6.2% to 7.5% are Karnataka, Punjab, Tamil Nadu and Uttar Pradesh. Two states, which showed vastly fluctuating year-to-year growth rates, are Bihar [2.8% in 2005-06, 20.3% in 2006-07and (-) 0.1% in 2007-08] and Madhya Pradesh (11.4% in 2003-04 and 3.6% to 4.2% in the next three years). Second, the trend growth rate observed in the national level GDP is generally reflected in the growth rates of major states. During the last five years, 2003-04 to 2007-08, there has occurred growth rates at a high plateau in national level GDP ranging from 7.5% to 9.7%. In a majority of the states, a similar picture of accelerated growth in these five years vis-à-vis the few preceding years is observed (Table 1). SDP growth in Andhra Pradesh, for instance, has ranged from 7.0% to 10.6% in these five years in contrast to a growth of 3.0 to 4.0% in the previous two years. Similarly, in Gujarat the growth has accelerated to a range of 8.9-14.8% in the latest period as against around 8.0% in the previous two years. Haryana too shows similar distinct trend. In other states, though the recent acceleration has not been sharp, the broad trend has been the same. Thirdly, it is observed that fluctuations in growth amongst states or those in year-to-year growth could be essentially attributable to varying fortunes of agriculture. Thus, agriculturally backward states like Bihar and Madhya Pradesh show vast year-to-year fluctuations. Another interesting feature that is linked to these state-wise fluctuations is that generally the ups and downs in the growth scenario at the states level tend to even out the national level growth and hence the amplitudes in year-to-year changes in all-India GDP are somewhat narrower.
Changing Ranks of States in Growth Performance With a view to studying the cases of leaders and laggards in growth performance in recent decades, states have been arranged in descending order of their average annual growth rates; this has been done for three quinquennia: 1980-81 to 1985-86, 1990-91 to 1995-96 and 2000-01 to 2005-06 - so as to study the changes over time. In so doing, the growth rates worked out based on different base year SDP series –1980-81 =100, 1993-94=100 and 1999-2000=100 – are assumed to be comparable. Table 2 presents the aforesaid ordering of all the 28 states – small, middle and large in size alike. It is interesting to find that the top growing states in the early 1980’s were small states of the north-eastern region – Arunachal Pradesh, Sikkim and Nagaland. Even states like Manipur, Assam and Meghalaya experienced reasonably high growth in that period. It was only the seventh north-eastern state, Tripura, that lagged behind during that period. Interestingly, even in the subsequent two decades, the growth rates in these north-eastern states have remained high, in fact one or two of them at the top. This phenomenon reflects the policy of higher levels of fiscal transfers by the central government and of generally giving greater focus on the development of the north-eastern region in the past two to three decades. To an extent, the high growth rates experienced by these states may have been statistical following their earlier low base.
Again, significantly, none of these latter five states, except for Gujarat, appears in the top position in the latest decade 2000-01 to 2005-06. If the new smaller states (Jharkhand, Chhattisgargh, and Uttarakhand) are excluded, Gujarat as well as Haryana and Maharashtra appear in the top five rankings during this recent period. Bihar is the one state that has consistently remained at the bottom during the last two decades; likewise Uttar Pradesh, Madhya Pradesh and Rajasthan. Setback to agricultural growth in Punjab is reflected in its relegation to an overall low growth ranking during the past two decades. Somewhat surprising is the case of Tamil Nadu which has considerably slipped to lower level in its ranking in the latest period as compared with its ranking in the preceding decades.
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Abstracting
from the high growth profile of these smaller states, an attempt is made
to study the changing ranks of major states in GSDP growth over the
periods studied [see Table 2(a)]. It is found that the top five states in
GSDP growth during 1980-81 to 1985-86, namely, Haryana, Punjab, Tamil Nadu,
Bihar and Assam, did not figure in the corresponding top five states
during 1990-91 to 1995-96 except for one state Tamil Nadu, the other top
four states in this period being Maharashtra, Gujarat, West Bengal and
Karnataka.