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States -- leaders and laggards

Nilanjan Banik

ECONOMIC reforms in India since 1992, have catapulted some States to a high-growth path, while others, which failed to leverage reforms, have been left behind. This is true, when one looks at the States' performance, during the pre- and post-reform perio d. The States that performed well before, did even better, during the post-reform period. The opposite is true for the laggard States. Their performance has fallen in the post-reform era.

There are broadly two ways of measuring a State's economic performance. The first is to look at the net domestic product figure. This indicates the economic well-being. The second is to look at the per capita income. The well-performing States will have higher per capita income, relative to those not doing well. Examining the six States (three leaders and three laggards), on the basis of these two parameters, establish the above hypothesis, that is, create showered goodies for the successful performers.

States falling in the ``leader'' category -- Punjab, Tamil Nadu and Gujarat -- are among the fastest growing States. Whereas those falling in the ``laggard'' category -- West Bengal, Bihar and Madhya Pradesh -- are economically the poorest.

Interestingly, the performance of the leaders vis-a-vis the laggards did not vary much, pre-reforms. For example, the net GDP, both for the leaders and the laggards, grew at an average rate of around 15 per cent. The individual figures are like this: Sta rting 1985-86 till 1990-91, the net GDP for Bihar, West Bengal and Madhya Pradesh grew at an average rate of 14.21 per cent, 16.14 per cent and 13.54 per cent, respectively. The corresponding figures for Punjab, Gujarat and Tamil Nadu during the same per iod, were 15.75 per cent, 17 per cent and 15.15 per cent, respectively.

The situation, however, changed post-reforms. The growth rate of the laggards slipped to an average rate of around 11 per cent -- 12.13 per cent for Bihar, 11. 5 per cent for West Bengal and 9.27 per cent for Madhya Pradesh. Whereas, the leaders improved by about 16 per cent -- 16.27 per cent for Punjab, 18.43 per cent for Gujarat and 15.26 per cent for Tamil Nadu.

The same holds true, when one talks about the per capita income figures. Pre-reforms, the per capita income for Punjab, Gujarat and Tamil Nadu was 14.52 per cent, 14.85 per cent and 16.49 per cent respectively. Post-reforms, the figures were 14.03 per ce nt, 16.02 per cent and 16.85 per cent respectively. However the same cannot be said about the laggards.

For Bihar, the per capita income figure fell from 11.82 to 9.83 per cent, post-reforms, West Bengal's figures dropped from 13.8 to 9.5 per cent. And Madhya Pradesh's per capita income came down from 13.52 to 10.87. Post-reforms, while the average growt h in the leaders' per capita income hovered round 15 per cent, for the laggards, it fell to about 10 per cent. Therefore, disparity in terms of per capita income, increased between the pre- and post-reform phases.

The above figures represent percentage growth in State net GDP and per capita income, calculated five years. It is to be noted, India resorted to the path of full-fledged reform from 1991, mainly because of the fiscal and external sector problems it face d during the early 1990s.

The laggard States outweigh their leaders in one important aspect -- taking loans from the Centre. West Bengal took a net loan of Rs. 5,186.3 crores for 1998-99 against Punjab's Rs. 1,390.1 crores and Tamil Nadu's Rs. 1,427.5 crores. But this appears jus tified as the economically poor States have to depend on the Centre for resources. What is intriguing, however, is that the laggard States invest less in development infrastructure.

For example, during the same fiscal, Bihar spent only Rs. 9225.20 crores as developmental expenditure, against the Rs. 12,003.4 crores Rs. 13,146.0 crores by Tamil Nadu and Gujarat, on account of development activities. Both infrastructure and human deve lopment are in a state of mess in Bihar.

The 13 most backward districts, in terms of female literacy, are in Bihar, Madhya Pradesh, Rajasthan, Orissa and Uttar Pradesh. The female literacy figure in Bihar is 22.9 per cent, and the Census projection says it would take another 12 decades for Biha r to become fully literate. The State also has one of the highest infant mortality rates in the country. During 1997, there were 71 deaths per thousand births. The corresponding figures for Punjab and Tamil Nadu were 57 and 58.

Bihar's high infant mortality can be explained in terms of poor health facilities offered by the state. Going by the National Family Health Survey (1995), the figures showing the average number of patients served by a government doctor are not available. West Bengal and Madhya Pradesh also suffer from the same problem. However, these figures are available for the leader States. In Punjab, a government doctor, on an average, examines 5,642 people every year. The corresponding figures for Gujarat and Tami l Nadu are 11,404 and 17,879 people, respectively.

The laggard States also face two other major issues -- providing safe drinking water and electricity. The National Family Health Survey shows that while 94.3 per cent of Punjab's rural households have access to safe drinking water, in Madhya Pradesh and Bihar, only 54 per cent and 62.4 per cent of the households enjoy the facility. Electricity also poses a similar challenge to the laggards. In Bihar, only 70.9 per cent of the total village area has electricity supply against the all-India average of aro und 94 per cent.

The Centre suspects these States are diverting loaned funds to non-developmental activities. There is no economic justification to this. Maybe, the laggards are more corrupt than the leaders!

(The author is a New Delhi-based senior business analyst. Response can be sent to nilbanik@yahoo.com.)