On the Necessity of Economic Growth in Poor States

Source: This post on the Necessity of Economic Growth in Poor States has been created based on the article “India’s Future Hinges on the Gangetic Plain” published in “Business Standard” on 4th January 2024.

UPSC Syllabus Topic: GS Paper 3 Indian Economy – Issues related to Growth and Development.

News: The article discusses the status of economic growth in the poorest states of India. It also highlights the areas these states can economically benefit in, and suggests steps for the same.

According to the author, India becoming a developed country by 2047 depends not only on its most advanced cities, but also on the contribution of its poorest states like Uttar Pradesh, Bihar and West Bengal.

These together constitute a third of India’s population (460 million).

What is the economic status of these states?

1. Low Average Income: Bihar’s average income is less than a third (32%) of the country’s average income. UP’s average income is under half (49%).
2. Historically Low Growth: In the preceding decade from 2012 to 2022 and before, the growth rates of UP and Bihar were below the national average. West Bengal grew only at 3.9% over the decade from FY12-22.

In contrast, other poorer states like Madhya Pradesh, Odisha, and Assam have grown faster than the national average from 2012-2022.

3. Recent Rise in Economic Growth: These states have however experienced GDP growth much higher than the national average in FY23 (10.7% for Bihar, 8.4% for UP and 8.6% for West Bengal).

What are some of the areas these states can benefit economically from?

1. Agricultural Sector: As Punjab and Haryana eventually shift away from cereals to higher-value crops, UP and Bihar could benefit from a second Green Revolution.
2. Tourism: Increased investment in tourism – highlighting the rich historical heritage of the Gangetic Plain – can be a huge employment generator.
3. River Transportation: Developing better river transport through the Ganges (like the Rhine or Danube) can connect these places to the world.
4. Demographic Dividend: These states will experience a continuous increase in their share of the working-age population for another decade (especially UP, Bihar), while richer states-especially in the South-will see that share declining.

What needs to be done?

1. Focus on education and skilling.
2. Infrastructure Development: Within infrastructure, a focus on expressways is important but rural roads and rural electrification must also be prioritised.
3. Developing IT-based services sector: These offer a pathway to higher incomes for these landlocked states.
4. Control over crime.
   5. Bifurcation of States: Bifurcating UP and Bihar into several smaller states can ensure better governance.
5. Changing the perception of these states as business-friendly states.

What happens in UP, Bihar and West Bengal will determine whether India will become an advanced economy or be stuck in a middle-income trap.

Their development is necessary to prevent large regional disparities and the resulting social and political tensions.

Question for practice:

Inclusive growth is a necessity for avoiding socio-political tensions in the country. Discuss in the context of inter-state economic disparities. What steps can be taken to boost economic growth in the Gangetic states?