Needed: A mechanism to develop underperforming states

In the early 1980s, the pejorative term ‘Bimaru’ was coined to classify Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh as ‘laggards’ struggling to keep up in comparison with growth rates set by other states.

Developmental performance of Indian states continues to diverge along several dimensions, including economic growth, distribution and poverty alleviation and quality of governance. Why this should be so remains a complex, important and critical puzzle. Insights into the political and developmental dynamics within some important Indian states might point out that varying politics and authority structures are a key determinant of regional developmental dynamics.

That poses for us an important question: in a situation when there are two types of governments that govern the lives the people of the state – one at the Centre and the other at the state – would that state remain outside the loop of development? Ideally, would the ruling NDA at the Centre be partial to Haryana, now a BJP-ruled state, in terms of resource allocation and facilitating other means of development than to West Bengal, a state languishing under an erratic political dispensation, but more essentially, which is ruled by a party politically opposed to the NDA?

When we argue about federalism, we basically want a fair degree of autonomy for a state to grow.  But regional imbalances due to a hierarchy of factors including varying qualities of regional governance are not beneficial for the overall health of India.

A recent report by Global Consultancy firm McKinsey & Company titled ‘India’s Economic Geography in 2025: States, Clusters and Cities’, classified states into four-broad groups for future growth potential. Chandigarh, Delhi, Goa and Puducherry have been termed as ‘Very High Performing’ states/Union Territories. Gujarat, Haryana, Himachal Pradesh, Kerala, Maharashtra, Punjab, Tamil Nadu and Uttarakhand have been rated as the ‘High Performing’ states, which are likely to account for 52 per cent of India’s incremental GDP growth from 2012 to 2025.

Another 12 states that include Andhra Pradesh, Karnataka, Rajasthan, Chhattisgarh, Jammu & Kashmir, West Bengal, and Odisha are classified as ‘Performing’ states. A bit worrying is the projection that North Eastern States, Bihar, MP, UP, and Jharkhand are likely to remain ‘Low performing’ states in 2025 though the report said that Bihar and MP could achieve faster growth by fixing the basics.

Regional growth is as much necessary as national growth and taken together, they are indistinguishable. Therefore, the report’s observation that Gujarat has multiple growth engines, led by manufacturing while TN has a strong services sector and knowledge-intensive industries, should encourage the other states lacking the wherewithal. The moot point is that there must be a mechanism in place for development for all states irrespective of the political dispensations and regional vagaries.

Findings of a study by Assocham in December, 2012 titled 'An Appraisal of Finances of States,' noted that majority of states have consistently performed better than all India GDP growth in the 11th Five-Year Plan (2007-12). While ‘forward’ states like Maharashtra, Gujarat and Haryana have consistently performed above 10 per cent growth in nominal GDP, the study highlighted consistent rise of ‘laggard’ states like Bihar, MP and Rajasthan that dropped broad hints about a support base for a liberal approach towards investments, despite political parties' differences in the rising states. Further, it said the positive indicators in the state budgets are reduction in states' deficits and improvement in revenues, both locally generated and devolution from Centre.

To place the Indian economy on high growth trajectory, the study noted, work culture of states – along with factors such as the government policy, bureaucratic efficiency, and infrastructure endowments – determines allocation of investments across states. The decentralisation of economic investment decisions give rise to competitive spirit among states to unlock their growth potential. The study said that underperformers like WB and AP have to search for their shortcomings, despite their favourable geographical positioning and natural resources.

Regional imbalance
And now, take the third set of data of regional imbalance. A Planning Commission paper on 'Refining State Level Comparisons in India' in 2012 analysed the performance of the states in three sectors – health, education and infrastructure. While Haryana, AP, Gujarat, Assam, UP and Maharashtra  underperformed in two of the three sectors analysed, the good performers includes Himachal Pradesh, Kerala, Odisha, TN and Bihar across all sectors. The ‘laggards’, according to the paper, include Uttarakhand, Rajasthan, J&K and Jharkhand across these three sectors, while Gujarat has done well only in infrastructure sector.

If a state is a victim of misgovernance, stalled development and blinkered priorities, where law and order is perceived to be biased towards injustice, what could be the way out within the federal limits short of a drastic President’s rule? Simply put, should the development-wary people of say, WB, be made to suffer just because they voted to power a regime with a different worldview and set of exigencies, as part of their karma, while the rest of the Indian states continue to lurch ahead?
With Narendra Modi at the helm, we must do without leaders who have ended up creating a personalistic, centralised and top-down political system. State-level governance in some parts of India – Bihar, UP and now WB typify these neo-patrimonial states of India – simply lacks public purpose. Instead of using state authority and resources to pursue public good, ruling elites in these settings use their power for personal and sectional gains appointing loyal minions to positions of power.

Modi’s precept of minimum government, maximum governance perhaps envisages a self-sustaining auto-mode. Why cannot the development of a state be run through a mechanism that is insulated from the vagaries of inept governance?