Tags:
- GS Paper – 2
- GS Paper – 3
- Inclusive Growth
- Growth & Development
- Government Policies & Interventions
- NITI Aayog
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For Prelims: Gross Domestic Product (GDP), Economic Advisory Council to the Prime Minister (EAC-PM). For Mains: Drivers of Growth in India’s Manufacturing and Services Sectors, Associated Challenges, Government Reforms for Industrial Growth in India. |
Source: Indian Express
Why in the News?
The Economic Advisory Council to the Prime Minister (EAC-PM) recently published a report titled “Relative Economic Performance of Indian States: 1960-61 to 2023-24.”
- Key Findings:
- Economic Performance:
- Southern States’ Growth: States like Karnataka, Andhra Pradesh, Telangana, Kerala, and Tamil Nadu have become significant contributors to India’s GDP, collectively accounting for 30% by March 2024, with accelerated growth post-liberalization.
- West Bengal’s Decline: West Bengal’s GDP contribution has shrunk from 10.5% in 1960-61 to 5.6% in 2024, with per capita income falling from 127.5% of the national average in the 1960s to 83.7% in 2024.
- Economic Performance:
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- Maharashtra: While still the largest GDP contributor at 13.3%, Maharashtra’s share has dropped from over 15%.
- Per Capita Income:
- Highest Earners: Delhi, Telangana, Karnataka, and Haryana have the highest relative per capita income in 2023-24, with Delhi’s at 250.8% of the national average.
- Gujarat and Maharashtra: Both have consistently maintained above-average incomes since the 1960s.
- Odisha’s Improvement: Odisha’s per capita income rose from 55.8% in 2000-01 to 88.5% in 2023-24.
- Punjab vs. Haryana: Punjab’s growth stagnated, with per capita income falling to 106% of the national average, while Haryana’s grew to 176.8%.
- Smaller States: Sikkim’s per capita income increased from 93% of the national average in 1990-91 to 319% in 2023-24, and Goa’s from 144% in 1970-71 to 290%, making them the richest states by per capita income.
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- Challenges for Poorer States:
- Uttar Pradesh and Bihar: These states struggle to keep pace, contributing 9.5% and 4.3% to GDP, respectively. Despite some improvements, Bihar remains significantly behind in economic growth.
- Challenges for Poorer States:
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- Policy Investigation: The report emphasizes the need for a deeper examination of policies influencing state-level economic growth to address widening regional disparities in India.
Reasons for Steady Growth in Western and Southern States:
- Robust Industrial Base: Gujarat and Maharashtra benefit from a strong, diverse manufacturing sector in textiles, chemicals, and engineering, driven by investment-friendly policies.
- Thriving Service Sector: Rapid urbanization and improved infrastructure in Karnataka and Tamil Nadu have boosted their IT and services sectors, supported by a skilled workforce.
- Agricultural Advancements: States like Maharashtra and Kerala have adopted sustainable agricultural practices, supported by government interventions in irrigation and technology.
- Strong Regional Connectivity: Western and Southern regions benefit from strong transport and logistics networks, with ports in Gujarat and roadways in Tamil Nadu facilitating trade.
Economic Advisory Council to the Prime Minister (EAC-PM):
- Role: An independent, non-constitutional body that advises the Prime Minister on economic and related issues.
- Functions: It highlights key economic concerns from a neutral perspective and advises on issues like inflation, microfinance, and industrial output.
- NITI Aayog’s Role: Acts as the nodal agency for EAC-PM for administrative, logistical, planning, and budgeting purposes.
- Reports: The council periodically releases reports like the Annual Economic Outlook and the Review of the Economy.
Measures to Enhance Economic Performance:
- Decentralized Planning: Empower local governments to create development plans tailored to regional needs with community involvement.
- Infrastructure Development: Prioritize investments in roads, railways, ports, and digital connectivity through Public-Private Partnerships (PPP) to enhance trade and mobility.
- Sectoral Focus: Promote agricultural productivity through technology and irrigation improvements, and encourage sector-specific policies for manufacturing and services.
- Skill Development: Align vocational training programs with industry needs and improve education quality.
- Innovation and Entrepreneurship: Support startups and research collaborations to foster technological advancements.
- Digital Transformation: Implement digital solutions for governance and promote digital literacy.
- Collaborative Governance: Encourage collaboration between states to share best practices and resources, ensuring alignment between central and state policies.
Conclusion:
The steady growth in Western and Southern states results from strategic planning, robust industrial and service sectors, effective government policies, and a focus on sustainability. These states are crucial to India’s ambition of becoming a USD 7 trillion economy by 2030. To maintain this momentum, addressing regional disparities and fostering inclusive growth are essential for balanced development across the country.
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