By Devanshee Dave
On Thursday, Crisil released a report named States of Growth, which analyses the performance of different states of India by growth, inflation and fiscal health for the period of 2013 to 2017. It differentiates Indias fastest growing states from the slowest ones. The overall growth is commendable, but the report reveals a significant inequality of growth pattern between the states.
An overview
The report was prepared on the basis of three macroeconomic parameters: growth, inflation and fiscal health of the states, but it was restricted to the pre-demonetisation period only. According to the Chief Economist at Crisil, There is a wide divergence in the performance of states and the nuances of that gets buried in aggregated national statistics.
As per the report, between fiscals 2013 to 2017, Gujarat, Madhya Pradesh and Haryana were the fastest growing states and Punjab, Uttar Pradesh and Kerala the slowest.
Insights of the report
The fastest growing states have witnessed a good performance in the labour-intensive sectors like construction, manufacturing, trade, hotels, transport and communication services. Among the most rapidly growing states, Gujarat and Haryana also put up an encouraging show in terms of gross value added (GVA) of labour incentive sectors as well the GDP. On the other side, the comparatively poorer states like Chhattisgarh, Orissa and Jharkhand have done a brilliant job by getting the growth of their labour incentive sectors higher than the Indian average. It has also helped create better jobs in these states. On the contrary, Rajasthan, Tamil Nadu and Telangana displayed the poorest track record in this sector.
The study also threw some light on the inflation scenario prevailing in different states. It stated that the inflation rates in 11 states had fallen faster than Indias average inflation of 6.8 percent.
In terms of growth of the construction and manufacturing sector, Gujarat has outperformed others, registering a rise to 34.4 percent from 28.4 percent of GVA, which is very close to Chinese values. Chhattisgarh and Haryana have secured the top places in manufacturing and trade, transportation and communication respectively.
Financial strength
Chhattisgarh, Karnataka, Gujarat, Maharashtra and Telangana were among the states who have maintained their fiscal deficits below three percent and still registered high growth, whereas Uttar Pradesh, Punjab and Rajasthan were noted for their weak fiscal health with high debts. Punjab and Uttar Pradesh witnessed the lowest GDP growth; with Kerala not much higher up on the list.
Overall scenario
In conclusion, the report states that Gujarat and Maharashtra have performed better in the three macroeconomic parameters by having the growth rate above the national average, inflation and debt levels below the national average and fiscal deficit lesser than the target set by the Fiscal Responsibility and Budget Management (FRBM) Act. On the other hand, Bihar, Rajasthan and Uttar Pradesh have secured the lowest positions in the report owing to a dismal showing in the metrics mentioned above.
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