Dhurjati Mukherjee
Backward States have shown remarkable recovery, according to provisional data released recently by the Central Statistical Organization (CSO) for the year 2012-13. Madhya Pradesh dislodged Bihar from its numero uno position in terms of higher growth of gross domestic product. Bihar’s growth, consistently above 12 per cent since 2008-09, slowed from an impressive 13.26 per cent in 2011-12 to 9.48 per cent in last fiscal while MP recorded a 10 per cent advance. However, a comprehensive comparison will have to wait until growth data from Kerala, Maharashtra, Rajasthan and Delhi, all of which have maintained robust growth in recent years are received.
Bihar phenomenal economic expansion can no doubt be ignored. It added Rs 13,679 crores to its GDP, taking its economy from Rs 144,278 crores in 2011-12 to Rs 157,957 in the last fiscal. Madhya Pradesh added more than Rs 20,000 crores to its economy in the past one year, thus expanding its GDP from Rs 201,290 to Rs 221,463 during the same period.
Growth in per capita income has been rather poor in Bihar, adding only Rs 1009 in 2012-13 while Jharkhand and Madhya Pradesh have seen suwch income rise by more than Rs 2000. Odisha also managed to add Rs 1450 in its per capita income in the last one year. Though per capita income may be less than Jharkhand, MP and Odisha, the relatively poor States have done well and according to experts, even better growth rates are expected in the coming years.
Thus one has to agree that people are leading better lives in States once considered Bimaru – an acronym for Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh (some read it as ill States). In fact, at a recent National Development Council meeting that the concept of Bimaru was no longer valid for the Planning Commission because of high growth rates and rise in per capita incomes.
One reason for the pace of growth in the above States, except Rajasthan, is neo green revolution and high agricultural output. Madhya Pradesh, Chhattisgarh as also Bihar have invested substantially on irrigation and good coordination with the farmers. In fact, MP recorded 18 per cent growth in agricultural output in 2011-12 and it is now the country’s highest wheat producing State. Similarly the agricultural growth rate is now almost around 15 per cent in both Bihar and U.P. However, it may also be added that there has been a marked improvement in agricultural investments and productivity of most States in the country.
Moreover, allocation for a second green revolution in the eastern States for the last two to three years has greatly helped in this regard. This year it has remained unchanged at Rs 1000 crores though the requirement is much more as many States – not just in eastern India – are the beneficiaries of the fund. Assam, Bihar, Chhattisgarh and West Bengal have already increased their contribution to rice production through the continuance of this programme.
This apart, the Centre has been generous with funds and cannot be denied appreciation for aiding the rapid growth of States. Development of infrastructure, specially power and national roads, have facilitated growth of the backward States to some extent though much more can and should be done. Broadband connectivity is another area where attention needs to be given and it is understood that through the National Optical Fibre Network (NOFM) broadband connectivity is expected to reach thousands of gram panchayats shortly.
What is more, in all these States, industry too grew at a rapid pace, helped by the government’s policy. Chhattisgarh and Rajasthan, for example, are freeing up Government land for establishing industrial zones and increasing investments in infrastructure such as roads. And there could be much more in store.
The development of the States augurs well for the economy as a whole though fund requirement is a big constraint in gearing up growth faster. Additionally, one cannot deny the fact that utilization of funds in a proper manner through good and efficient governance could have ensured better results. But some States pay little rather no heed to it.
High debts of certain States which include West Bengal, Punjab and Kerala are indeed a big problem. As per a RBI report on State finances, in 2012-13, most States were able to contain their interest payment-to-revenue receipt (IP-RR) ratio to 15 per cent except Gujarat, Kerala, Bengal and Punjab. West Bengal recorded the highest IP-RR ratio at 27.2 per cent while Chhattisgarh recording the lowest at 4.5 per cent.
The high debt servicing has obviously been affecting development work and the villages have to suffer. West Bengal’s debt burden is set to rise to Rs 2.26 lakh crores and needs to pay around Rs 24,000 crores towards principal and interest. Thus, except for Central funds, it has virtually nothing left for development work after paying salaries, pensions and debt repayments. The situation of Kerala and Punjab is also critical.
Thus, there is need for New Delhi’s intervention for the debt-ridden States and at least reduce or defer interest payments which incidentally the Bengal Chief Minister Mamata Banerjee has been clamouring for, claiming that her Government inherited a huge debt left behind by the Left Front government. As nothing was done years back when the Left Front government in Bengal was allowed to raise debt after debt, it is now the onus of the Centre to come out with some innovative solution to save the State and also the other debt-ridden States of Kerala and Punjab. Will it? Or better question would be does it want to? INFA
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