From 'Sone Ki Chidiya' To Falling On Loop, Bengal's Economy Dire; List Of Richest & Poorest States In India

Tables have turned in the map of India's GDP from 1960-61 to 2023-24, with southern states emerging as top contributors to the economic growth by the end of FY24, which was not the case in the 1961 fiscal. On the other hand, West Bengal which was a blooming economy in 1960-61, has been consistently failing to keep up with the pace of growth trends. Western states have performed well throughout the study, as per EAC-PM working papers.

In the latest paper, the Economic Advisory Council (EAC) to the Prime Minister focused exclusively on the relative performance of states, measured using two indicators- (1) Share in India's GDP and (2) Relative per capita income.

Southern States:

The EAC-PM analysis showed that before 1991, southern states did not show expectational performance. However, since the economic liberalization of 1991, the southern states have emerged as the leading performers.

In 2023-24, states like Karnataka, Andhra Pradesh, Telangana, Kerala and Tamil Nadu together accounted for approximately 30 percent of India's GDP. In addition, per capita income of all southern states became higher than the national average after 1991, it said.

Notably, the paper pointed out that the relative per capita income in Telangana is now 193.6 percent of the national average, while Karnataka, Tamil Nadu, and Kerala have per capita incomes 181 percent, 171 percent, and 152.5 percent of the national average, respectively

Western States:

Maharashtra and Gujarat who are part of western states geographically, have have consistently performed well throughout the study period.

According to EAC-PM paper, Maharashtra has maintained the highest share of India's GDP for almost all of the period. Gujarat's share remained at broadly the same levels until 2000-01, before beginning to increase rapidly- from 6.4 percent in 2000-01 to 8.1 percent in 2022-23. Both Gujarat and Maharashtra have had per capita incomes exceeding the national average since the 1960s. Initially, Gujarat lagged behind Maharashtra, with a relative per capita income of 118.3 percent compared to Maharashtra's 133.7 percent in 1960-61.

It added, this disparity persisted until 2010-11, when Gujarat surpassed Maharashtra. By 2023-24, Gujarat's per capita income has risen to 160.7 percent of national average, as compared to 150 percent for Maharashtra.

Among other western states, Goa has excelled in per capita income terms, with its relative per capita income doubling since 1970-71. In 2022-23, the per capita income of Goa was nearly three times the national average. With this, it is second in terms of per capita income after Sikkim.

Northern States:

Here, Delhi and Haryana have performed notably well, while Punjab's economy has deteriorated after 1991. Despite its small size, Delhi saw its share of India's GDP increase from 1.4 percent to 3.6 percent during this period. Punjab and Haryana, which were once part of the same state, have experienced diverging economic trajectories.

Furthermore, the paper highlighted that Punjab's GDP share grew during the 1960s, mainly due to the Green Revolution, but then plateaued at around 4.3 percent until 1990-91. It began to decline thereafter, finally reaching 2.4 percent in 2023-24. Similar trends were seen in terms of relative per capita income. Punjab's per capita income peaked at 169 percent of national average in 1970-71and has since declined to 106.7 percent of national average, even lower than the 119.6 percent in 1960-61.

Meanwhile, Haryana, which initially lagged behind Punjab on both accounts, continued to show robust performance. Haryana's share of India's GDP now exceeds that of Punjab, and its relative per capita income has reached 176.8 percent, compared to Punjab's 106.7 percent in 2023-24. EAC-PM paper said, "This raises an interesting question: Did Punjab's focus on agriculture contribute to a form of 'Dutch disease,' hindering its transition to industrialization?."

Eastern states:

In the study, the shocking revelation was the change in the economy of West Bengal, from a blooming to one of the least performing.

As per the paper, West Bengal, which held the third-largest share of national GDP at 10.5 percent in 1960-61, now accounts for only 5.6 percent in 2023-24. It has seen a consistent decline throughout this period. West Bengal's per capita income was above the national average in 1960-61 at 127.5 percent, but its growth failed to keep pace with national trends. As a result, its relative per capita income declined to 83.7 percent in 2023-24, falling below that of even traditionally laggard states like Rajasthan and Odisha.

Moreover, the relative per capita income of undivided Bihar was 70.3 percent in 1960- 61. It started declining thereafter and bottomed out at 31 percent in 2000-01 for the bifurcated state of Bihar. After that, it has been roughly flat at around 33 percent.

EAC-PM paper said, "We understand that the actual household incomes may be higher than what is implied here as the remittances are not captured here, however the gap is still very stark. The other eastern state, Odisha which was also seeing a consistent decline in terms of relative per capita income from 1960s to 1990-91 (70.9 percent to 54.3 percent), has seen a significant turnaround since then. Its relative per capita income increased from 54.3 percent in 1990- 91 to 88.5 percent in 2023-24."

Overall, EAC-PM paper said, "the western and southern regions of the country are outperforming others, with notable success also observed in parts of the north. The stark contrast between Haryana and Punjab warrants further investigation to understand its policy implications. The eastern part of the country continues to be a concern."

Lastly, it said, "An interesting overall observation is that the maritime states have clearly outperformed the other states, with the exception of West Bengal. Even the coastal state of Odisha which was traditionally a laggard state has seen improved performance in the last two decades."