Download This study has examined whether the economic divide

COPY FOR ‘COMMENTARAO’ IN “THE TELEGRAPH” OF JUNE 29 2009
“WIDENING REGIONAL DISPARITIES” BY S L Rao
The Public affairs Centre in Bangalore has completed a preliminary study on the Northsouth regional differences. It examines the generally held belief in recent years that there
is an economic divide between India’s north and south. The study compares the four
major states of Tamil Nadu, Karnataka, Andhra Pradesh, and Kerala with Uttar Pradesh,
Bihar, Madhya Pradesh, and Rajasthan, termed the BIMARU states by Ashish Bose
many years ago. A more exhaustive comparison is between Tamil Nadu and Uttar
Pradesh.
In 1960-61, TN’s per capita income was Rs.5,053 versus Rs.3,338 for U.P., a difference of 51%.
In the early 1980s, the gap narrowed to 39 % but in 2005-06, the gap widened to 128%. The gap
became pronounced from 1992-93. Thus TN moved far ahead of UP by 2005. Poverty ratios
between the two states show that till about 1985, TN was the same or worse than UP. A 1998
report by Datt and Ravallion estimated nearly 70 percent rural poverty in Tamil Nadu in 1960,
versus only about 48 percent in Uttar Pradesh. Economic deprivation and inequality were much
higher in TN but it reduced them rapidly. By 2005, TN’s per capita income exceeded UP’s by more
than before, and poverty ratio declined below UP. How does one explain this differential growth?
The question has been attempted by economists who have explained differential economic
transformation of countries by many factors. Early on they focused chiefly on the role of capital as
an accelerator of economic growth. However, many developing countries demonstrated that
investment does not by itself achieve economic growth. Technical progress enhanced productivity
and then with the emphasis on human development by the UNDP, other factors have been brought
in to explain growth. They include the stock of different types of infrastructure; human resources
such as skilled labour, power and roads. Non-economic factors like quality of public governance, its
efficiency in developing infrastructure, delivering social services, etc, are seen as key factors. This
is apart from more familiar factors like stability of the financial system, availability of skilled labour
and technology locally or through import, substitutes like diesel generated power, using railways
when roads are poor or limited, moving to other states where there is better law and order, but the
quality of governance in the state in which investment is made provides no substitutes. Literacy,
higher education, institutional quality, etc., are all part of human resource development.
Factors that impact on economic performance are those that are essential and those that are
enabling, for growth to occur. The enabling factors would be literacy, health, public investment,
infrastructure, etc. The essential precondition to growth creates the enabling environment. It has to
do with governance. Most investors assess both sets of factors in making strategic decisions.
the categories of factors which may have created the initial conditions for the observed income
divergence between the two states:
The study looks at the comparative data on human resource capabilities, urbanization,
Infrastructure, development expenditures by governments and their efficiencies in resource use,
and governance. For human resource capabilities, it compares rates of literacy, infant mortality,
proportion of graduates and technical manpower. TN’s literacy rate has always been at a higher
level when compared with that of UP. Infant mortality rates indicate the level of health care
services, ignorance of good health practices, poor maternal health and poor family health. TN’s
IMR has always been lower than that of UP, though the disparity has been declining over the last
thirty years. The proportion of graduates was higher in UP in 1971 and 2001. Enrolment in
technical courses (B.E./B.Sc. (Engg/B.Arch.), Medicine, Dentistry, Nursing, Pharmacy, Ayurvedic &
Unani, B.Ed. & B.T) as proportion of the 15 plus age group is a proxy for the extent of technical
manpower. Technical enrolment in TN is well above UP for recent years and clearly technical
manpower has increased significantly in TN because of encouragement to setting up engineering
and other technical colleges. TN has always been ahead of UP on urbanization and since 1991 it
has been growing at a faster rate than UP. The study uses installed generation capacity as proxy
for infrastructure and finds that TN’s installed capacity was much higher in the 1960s than UP and
since the 1980s it has grown faster. TN’s telephone penetration is higher than that of UP. There is
little disparity between the two states on food grain yield per hectare perhaps because of the
spillover effect of the green revolution from prosperous agricultural areas of Punjab to western UP.
. While TN had greater food grain yields than UP for many years, UP scores over TN for many
recent years.
Relative efficiency of the governments in resource utilization show for example that TN spent
Rs.22,389 during 1980-85 for creating every additional KM of road during 1985-90, while UP spent
10 times more than TN, Rs.232,365 over 1980-85 to create an additional KM of road during 198590. An example from the social sector in UP is primary education that showed schooling
infrastructure expanded rapidly but, classroom activity levels had not improved. Between 1996 and
2006, one out of every four existent government schools were set up, the proportion of schools
with at least two pucca rooms rose from 26 percent in 1996 to 84 percent in 2006, ifree uniforms
and textbooks were provided in 1996 to 10 percent and less than half of schools and went up to
nearly 99 percent of schools in 2006. But the results were poor. In 2006 half the government
schools had no teaching activity. In 2006 the percentage of children out of school in TN was 4.9 in
the age group 7-16, 3.6 in the age group 11-14 and 15.8 in the age group 15-16 (both boys and
girls), compared with 8.9, 8.9 and 22.6 respectively for UP during that year. Similarly, the
proportion of children not going to any government, private school, balwadi or anganwadi, was 57.7
percent in UP for children in the age group 3, whereas it was only 13.1 for TN. Poor efficiency in
the deployment/utilization of resources may also have led to economic growth in UP being slower
than in TN.
Governance was measured by political stability as the tenure of Chief Ministers, law and order
measured by the number of police firings, and functioning of the judiciary measured by the number
of cases pending in Courts. The average tenure of chief ministers in TN and UP till 1967-68 was
similar and since then has declined in both states. The decline was steeper in UP, with average
tenure in UP being substantially below that of TN. Available data shows police firings per million
populations to have been significantly higher in UP than in TN. Similarly, pending cases have been
much lower in TN.
Clearly, governance-continuity of Chief Ministers is important but so is their capability. In recent
years UP had longer tenures of CM’s but growth has been poor. Good governance leads to better
physical and social infrastructure and more effective government expenditures. Agriculture must be
studied since its growth could transform lives of many millions. Every part of the country has seen
poor and declining productivity in almost all crops. Central government expenditures on agriculture
to GDP have been declining. Administrative reform to improve quality of government expenditures
is essential.
A study of this nature needs to be done for all states. We must look at the differentials within a
state. We need to find data for many years on many other factors as well. It is a useful effort and
must be expanded. (1256)