India’s Growth Performance 2000–2012: Region-Based Perspective

Chapter 2 makes an attempt to find homogeneity in the structural pattern by classifying all states into six broad regions of east, west, north, south and central, (categorized by Zonal Council of India), and northeast (under Northeastern Council). It justifies such a categorization of regions as adjoining states share similarities in terms of socio-cultural traits, agro-climatic conditions, natural resources and topography. Such homogeneity offers vast potential for states within a region for resource sharing and emulation of best practices through inter-state co-ordination for improving and harmonizing both overall growth outcomes of India and of individual states. In this context, the author discusses institutional mechanisms to secure coordination amongst states. Discussing the evolution of zonal councils and the Inter-State Council, the author notes that institutional mechanisms do exist but they need to be activated to sort out the vexed issues cross-cutting states to secure not only higher but also harmonious growth. The chapter extensively shows the dimensions of the growth and variability across sectors at these six regional levels, and then the contribution of these regions towards all-India growth. The chapter has studied the period 2000–2012 under three sub-periods of 2000–2003, 2004–2008 and 2009–2012. These sub-periods broadly correspond to the phases of low growth, high growth and the post-crisis period respectively. The growth results suggest that except the Northeast region, all others shared the benefits of high growth during 2004-08. Further, except the southern and the western regions, all the other regions experienced acceleration in absolute as well as per capita growth in the second and third sub-periods. The western region had the highest growth rate during 2004–2008 and 2009–2012 and also for the entire period of study. The Gross State Domestic Product share of the tertiary sector was the highest followed by that of the secondary and the primary sectors for the northern, southern and the western regions whereas for the eastern, central and Northeastern regions, the share of the tertiary sector was the highest, followed by that of the primary and the secondary sectors. The western and the southern regions have been the key drivers of higher growth rates for the Indian economy. However, sustenance of the higher growth rates would require that growth is shared evenly across regions rather than being concentrated in a few regions. Further, the central and eastern regions account for more than half of the country’s population. Thus, from a welfare perspective, higher growth rates for these two regions are crucial. Most importantly, the dispersion of income across states and regions has gradually increased between 2000 and 2012, and this aspect demands serious attention. Thus while reframing policy process more voices and representation must be incorporated from central and eastern regions to ensure balanced development.