Fast growth trickles up from the states

Few will be surprised that Gujarat is on top and Madhya Pradesh at the bottom. But many will be astonished that Bihar has skyrocketed to share the lead with Gujarat, with Kerala close behind in third position. Indeed, Bihar’s growth average of 11.03% is almost China-like. The state has done so badly for so long that it may just be enjoying catch-up gains whose sustainability remains to be established. Nevertheless, for Bihar to top the growth league is revolutionary.

The biggest negative surprise is that Punjab, once the growth leader, has dropped to near the bottom. Assam was always in the lower half of the growth table, but has slipped further to second-last position.
In the past, the richest states often grew fastest and the poor ones slowest. Not any more. The accompanying table shows that poor states are no longer clustered at the bottom of the growth league, they occupy several positions high up. Four of the poorest states — Bihar (11.03%), Orissa (8.74%), Jharkhand (8.45%) and Chhattisgarh (7.35%) — now qualify as miracle economies, going by the international norm of 7% growth. And, wonder of wonders, Uttar Pradesh at 6.29% is now quite close to the miracle growth norm.

The sudden high growth in Bihar, Kerala, Orissa, Jharkhand and Chhattisgarh cannot be attributed to New Delhi. It arose from changes at the state level. Central policies certainly improved growth potential after 1980, and more substantially after 1991. But only in the last few years did slow-growing states develop local leadership and policies that converted potential into growth.

Their widespread participation is confirmed by the rapid rise in rural sales of motorcycles and branded consumer goods. Even stronger confirmation comes from the spread of the cellphone revolution. The rate of new cellphone connections has risen steadily to touch 12-15 million per month in 2009. Hundreds of millions earlier excluded from telecom are now getting included.

As of September 2009, urban tele-density in Rajasthan (104.4%) and Orissa (101.59%) exceeded the national level of 101.38%. Bihar and Jharkhand (99.41%) were almost on par, with Uttar Pradesh and Uttarakhand (88.13%) not far behind. Rural tele-density in these states is still low. But thousands of tele-towers are coming up, so rural tele-density is rising fast from a low base.

--- Courtesy : Swaminathan S Anklesaria Aiyar, ET Bureau