<\/p>\n
News<\/span><\/b>: At present, India\u2019s economic policymakers are trying to look after potential stagflation.\u00a0<\/span>\u00a0<\/span><\/p>\n Three broad groups of states are identifiable, each with a distinct development model.\u00a0<\/span>\u00a0<\/span><\/p>\n Bihar model<\/span><\/span><\/b><\/p>\n Coverage:<\/span><\/b>\u00a0<\/span>\u00a0<\/span>The model is generally found in a group of the <\/span>least developed states<\/span><\/b> which includes Uttar Pradesh, Jharkhand, Odisha, Assam and all the north-eastern states, among others.\u00a0<\/span>\u00a0<\/span><\/p>\n Features:\u00a0<\/span><\/b>\u00a0<\/span>In this model, the states are growing at rates comparable to the<\/span> national average<\/span><\/b>. They have <\/span>very low per capita incomes<\/span><\/b>, the share of industry in the state\u2019s gross domestic product (GSDP) is below the national average.\u00a0<\/span>\u00a0<\/span><\/p>\n Further, there is a lack of modern industrial hubs, few existing large industrial units are often state-owned, there is a weak backward or forward linkage with the local economy.\u00a0<\/span>\u00a0<\/span><\/p>\n These states have low levels of <\/span>human <\/span><\/b>or <\/span>social development<\/span><\/b> and <\/span>infrastructure development<\/span><\/b>.\u00a0<\/span>\u00a0<\/span><\/p>\n The workforce depends upon agriculture, the non-agricultural workforce is mainly engaged in low-productivity, and low-wage jobs in thousands of micro, small and medium enterprises (MSMEs).<\/span>\u00a0<\/span><\/p>\n Problems<\/span><\/b>\u00a0<\/span><\/p>\n These states have a large size of government relative to GSDP: 26% compared to the 17% national average.\u00a0<\/span>\u00a0<\/span><\/p>\n Government expenditure is <\/span>heavily dependent<\/span><\/b> on central transfers rather than the state\u2019s own resources: over 59% as compared to the national average of just over 36%.\u00a0<\/span>\u00a0<\/span><\/p>\n Solution<\/span><\/b>\u00a0<\/span><\/p>\n Cooperative federalism <\/span><\/b>is important in <\/span>accelerating inclusive development<\/span><\/b> in these states.<\/span>\u00a0<\/span><\/p>\n If the government expenditure is strategically deployed, then it can significantly impact the development trajectory of the state.\u00a0<\/span>\u00a0<\/span><\/p>\n Gujarat model<\/span> <\/span><\/b><\/p>\n Coverage<\/span><\/b>: It includes a group of fast-growing state like Gujarat, Haryana and Telangana.<\/span>\u00a0<\/span><\/p>\n Features<\/span><\/b>: <\/span>They have a high per capita income, nearly 6 times that of Bihar. A large share of its workforce is still dependent on agriculture. The share of industry in GSDP is at 44% (way above the national average).\u00a0<\/span>\u00a0<\/span><\/p>\n The state\u2019s growth is driven by <\/span>traditional<\/span><\/b> industries<\/span><\/b> like agro-processing, <\/span>modern industries<\/span><\/b> like pharmaceuticals, petrochemicals, IT services and modern financial services.\u00a0<\/span>\u00a0<\/span><\/p>\n In fact, infrastructure is highly developed.\u00a0<\/span>\u00a0<\/span><\/p>\n Problems<\/span><\/b>\u00a0<\/span><\/p>\n These state\u2019s lag behind the country\u2019s leading states in social development, such as education and health outcomes. This challenges the quality of human resources which determines competitiveness.<\/span>\u00a0<\/span><\/p>\n Causes of problem<\/span><\/b>\u00a0<\/span><\/p>\n The <\/span>deficit<\/span><\/b> in education and health outcomes is due to the relatively small size of government expenditure (only 11% of GSDP). Further, much of the spending goes to physical infrastructure.<\/span>\u00a0<\/span><\/p>\n Tamil Nadu Model<\/b><\/span><\/p>\n \u00a0<\/span>Coverage<\/span><\/b>: This includes industrialized states\/UTs like Tamil Nadu, Delhi, and Maharashtra. Kerala too\u00a0<\/span>\u00a0<\/span><\/p>\n Features<\/span><\/b>: <\/span>These are <\/span>prosperous states<\/span><\/b> with high per capita income. These are India\u2019s most industrialized states. In addition, the Industrials sector accounts for over <\/span>34% share<\/span><\/b> in GSDP.\u00a0<\/span>\u00a0<\/span><\/p>\n Unlike Gujarat, the share of its workforce in agriculture is not above 30%. There is high social development indicated by high life expectancy.<\/span>\u00a0<\/span><\/p>\n The state\u2019s dependence on<\/span> central transfers<\/span><\/b> is also quite low, in fact lower than Gujarat\u2019s.\u00a0<\/span>\u00a0<\/span><\/p>\n Much of the achievements have been despite <\/span>Tamil Nadu government\u2019s expenditure<\/span><\/b> well below the national average.<\/span>\u00a0<\/span><\/p>\n Solutions<\/span><\/b>\u00a0<\/span><\/p>\n The Tamil Nadu model of development is thus the most successful model under Indian conditions.<\/span>\u00a0<\/span><\/p>\n The states should improve their power situation and leverages on <\/span>science and technology research institutions<\/span><\/b> to emerge as a knowledge economy hub.<\/span>\u00a0<\/span><\/p>\n The <\/span>three development models <\/span><\/b>described above spell out a roadmap for long-term development in different states.\u00a0<\/span>\u00a0<\/span><\/p>\n States following the Tamil Nadu model should stay the course and do more of the same.\u00a0<\/span>\u00a0<\/span><\/p>\n States that follow the Gujarat model should course correct, prioritizing education and health services<\/span>\u00a0<\/span><\/p>\n States that have followed the Bihar model should switch to the Tamil Nadu model. They need strong central government support to do so.\u00a0<\/span>\u00a0<\/span><\/p>\n Further, the labour migration from Bihar model states to Gujarat model states and especially Tamil Nadu model states will serve as the<\/span> market-based adjustment <\/span><\/b>within the country.<\/span>\u00a0<\/span><\/p>\n Source<\/span><\/b>: The post is based on an article \u201cThree development models that can guide Indian state economies<\/strong>\u201d published in the Live Mint<\/strong> on 20<\/strong><\/span>th<\/strong> May 2022<\/strong>.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" News: At present, India\u2019s economic policymakers are trying to look after potential stagflation.\u00a0\u00a0 Possible long-term strategies for high, employment-intensive growth Three broad groups of states are identifiable, each with a distinct development model.\u00a0\u00a0 Bihar model Coverage:\u00a0\u00a0The model is generally found in a group of the least developed states which includes Uttar Pradesh, Jharkhand, Odisha, Assam… Continue reading Three development models that can guide Indian state economies\u00a0<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10501],"class_list":["post-185610","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/185610","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=185610"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/185610\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=185610"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=185610"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=185610"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Possible long-term strategies for high, employment-intensive growth<\/span><\/b>
\n<\/span><\/h5>\nWay Forward<\/span><\/b>\u00a0<\/span><\/h5>\n