By Satyajit Mishra
In 1947, India was born out of colonial territory and over 500 princely states. Since then there have been several rounds of unravelling, mix and match, to try and make the perfect states with regards to language and cultural unity. The most important arguments though are to be made for economic development and better governance.
To know if forming new states is economically viable, we need to analyze the performance of a few newly formed states in the past decade. These would include Chhattisgarh from Madhya Pradesh, Jharkhand from Bihar, and Uttarakhand from Uttar Pradesh.
Chhattisgarh, rich in its natural resources performed poorly as a part of Madhya Pradesh. Not only for herself but for Madhya Pradesh as a whole. Post partition however it is doing much better economically across various parameters. Both states now boast of consistently high growth. The GDP of the state has grown from 47,862 Crore in 2004-05 to 84,674 Crore in 2011-12 averaging a year on year (YoY) growth rate of 8.57%. Similarly, the GDP of Madhya Pradesh has grown from 112,927 Crore to 201,290 Crore in the same time period averaging a growth rate of 8.7%. When these states were one, they never managed a growth rate of above 6%. Better control over administration has also enabled them to fight poverty; Madhya Pradesh has been able to bring down its percentage of people below poverty line by as much as 12%.
Uttarakhand, once separated from Uttar Pradesh, recorded rapid economic growth and social gains, outperforming UP. Uttarakhand was able to bring down the percentage of people below poverty line from 32.7% in 2004-05 to 17.9% in 2009-10. Really good figures for a country with 30% of its people below poverty line. In comparison, UP has been able to bring poverty down the figures from 40.9% to 37.7% over the same time period. Just over 3%. In terms of growth Uttarakhand has managed a very impressive YoY growth rate of 13.7%. UP has managed figures just under 7%. This is just 1 pc point over what it managed before the partition. The main reason why UP hasnt fared well post the partition is because UP is still a monster state with over 200 million people. The state should have been broken up to four new states as proposed by Mayawati in her last election. States as large as UP will find it very difficult to implement successful policies, such as the tax breaks and policies promoting the surge in tourism in Uttarakhand.
To be successful as new state, good governance is a must. Jharkhand has not been very successful since forming its own boundaries. It has faltered on various levels. Industry, agriculture and manufacturing often have double digit negative growth rates. Sometimes going up to as high as 32% in the red (Manufacturing growth rate in 2008-09). The percentage of people below poverty stands at 39.1% and the urban poverty percentage have actually increased over the years. In comparison Bihar itself has done remarkably well. Once often cited for its backwardness the state is doing well under good governance. Since the divorce, there have been double digit economic growth and social progress has thrived. Bihar posted a growth rate of 14.5% in 2012-13. Almost triple of the national average of 5% for that year. Good administration has allowed phenomenal growths in public expenditure, industry, transport, banking and insurance. As one big state, Bihar used to just manage a growth of 3%.
While luck may have played a factor for the success of the new states, gaining from Indias overall growth story; there is no denying the fact administration, good regulation and governance has also helped. Smaller the state, larger is the stake of the government in local success. This will help India grow right from the grassroots level. As of the 2012 census, there are roughly 40million people per state. Such figures are difficult to manage for developed nations leave alone a developing one such as Indias. The states need to be divided into a manageable level. She needs more states and the states need to be reorganised quickly if India is to accommodate for her population explosion. India will gain from more Telanganas, Gorkhalands or Vidarbhas.
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Source: All numerical data has been obtained from http://planningcommission.nic.in/data/datatable/
The author is currently in 3rd year of B.Com under Calcutta University specializing in accounting and finance. Also pursuing Chartered Accountancy. Reading research and analysis of the global economy, political matters that influence our economic decisions, game theory and strategies in war, strategy formulation and implementation and contemporary issues in marketing interest him a lot.