Poor Versus Prosperous India

Third chapter has conventionally taken state as a unit, and has evaluated the relative performance of five poor states (Bihar, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh) and five prosperous states (Gujarat, Haryana, Kerala, Maharashtra and Punjab) on the basis of some income and non-income dimensions of development from 1970-71 to 2008-09. Such an attempt is to prioritize the policy recommendations for the poor states for both immediate intervention and long-term convergence. The performance of the prosperous states in terms of per capita income has been far better than that of the poor states, and the gap in the average per capita income between the two groups of states has widened over time, particularly after the large-scale economic reforms. With better economic performance, these prosperous states have also done better than the poor states on education, health and human development. Though in case of Gujarat, such relationship between economic performance and human development is not strongly established. The author has observed that the states, which are economically more independent, more reform-oriented and have better physical, social and financial infrastructures, have performed better in terms of per capita income. This suggests that the slower-reforming and poorly performing states could improve their relative economic position and catch up with the better-performing states by speeding up the reform process, in particular by liberalizing their investment, industrial and infrastructure policies. The author has also found that the states, which have higher per capita incomes and which were able to spend a higher per capita amount on social services, have performed better in terms of human development, implying that spending higher per capita amounts in the social sector could be an effective way of achieving improvements in human development, and such causal relationship must be explicitly brought out in the policy process on regional development.