Financial Daily from THE HINDU group of publications
Wednesday, Oct 20, 2004
Top three States a socio-economic comparison
Jeevan Prakash Mohanty
The latest Centre for Policy Alternatives Society (CPAS) study " A Socio-economic Comparison of India's Three Top States" has gauged the performance of Maharashtra and Gujarat, the leading States in Western India, and Tamil Nadu, the most developed State in the South the fastest growing region in India.
The study basically covers the previous decade and discusses the socio-economic performance of the States. The economic performance has been measured by taking agricultural production, per capita availability of basic amenities, industrial development and the prevailing fiscal position. The measurement of social development has been done by taking crude birth and death rates, life expectancy and prevailing literacy.
The decennial growth of the State GDP of Gujarat (181.10 per cent) has been much better than Maharashtra's (160.49 per cent). However, in Maharashtra the primary and tertiary sectors have performed better and contributed most to the SGDP, whereas Gujarat leads in the secondary sector.
The per capita incomes in the three States are among the highest in India. Tamil Nadu has the fastest growth in the decade registering over 350 per cent. Maharashtra, on the other hand, has the highest per capita income. From 1989-90, the per capita income in Maharashtra grew 261 per cent touching Rs 23,726. Gujarat's per capita grew by more than 262 per cent and is now Rs 19,228 marginally less than Tamil Nadu's Rs 19,889 in 2000-01. Despite the relatively higher per capita incomes well above the national average of Rs 16,707, all three States are still struggling with poverty.
Poverty is the lowest in Gujarat with just 14 per cent living below poverty line. The population living below poverty line in Maharashtra is 25 per cent and Tamil Nadu 21 per cent.
However, the effort by the three States to lower the poverty level is encouraging. Among them Tamil Nadu has achieved the highest decline during 1993-94 and 1999-00 with 35.44 per cent, Gujarat follows with 35.4 per cent and Maharashtra last with 25.3 per cent.
The performance in agriculture can be best measured by results in increasing acreage, irrigated area, production and yield. In terms of increasing agriculture acreage, only Maharashtra has had a growth of 2.49 per cent. In terms of irrigated area Gujarat leads with 22 per cent followed by Tamil Nadu with 21 per cent. Maharashtra is well behind with only a 10.78 per cent rise in irrigated area.
However, irrigated acreage growth seems to bear no relation to production growth in Gujarat, where it actually declined by 25.19 per cent. Agricultural yield in Gujarat has fallen by 4.6 per cent. By comparison Maharashtra has fared very well with production up by 21.15 per cent and yield by 18.1 per cent. Tamil Nadu, however, had a lower production growth of 4.51 per cent but with a better yield increase of 19.58 per cent.
The credit-deposit ratio has been best in Tamil Nadu with 83.14 per cent in March 2004. Maharashtra follows with 74.25 per cent. Gujarat has fared poorly with 41.81 per cent. The decennial change rate in the ratio is positive in Maharashtra with 5.95 per cent, whereas both Tamil Nadu and Gujarat had a negative change rate in the credit-deposit ratio.
Electricity generation and consumption in the three States has seen a marked rise since 1992. Generation is highest in Gujarat with a decennial growth of above 92 per cent. Consumption too has been the highest in that State with a decennial growth of 154.15 per cent. Tamil Nadu follows with higher generation and consumption in electricity. The decadal growth in generation is 71.4 per cent and the consumption 152.38 per cent. Likewise, Maharashtra's growth in electricity generation has been around 66.66 per cent and in consumption 111.01 per cent during the last decade.
Maharashtra and Tamil Nadu have made better progress in terms of social indicators, leaving Gujarat well behind, but lag Kerala and Punjab, demographically the most advanced States. Tamil Nadu has the lowest birth rate of 19 per thousand but the decline (8.56 per cent) is well below the national average of 15.89 per cent.
Maharashtra with a birth rate of 20.6 per thousand, registered a tremendous decline of 25.09 per cent in 1990-2001. Gujarat is close to the national average with a birth rate of 25 per thousand populations and a decline of 15.54 per cent.
In sharp contrast to this, all three States are falling behind the national average decline (14.29 per cent) in Crude Death Rate (CDR) with only Tamil Nadu somewhat close at 13.64 per cent.
In 2001, Maharashtra had the lowest CDR of 7.5 per 1000 whereas the national average was 8.4, but the State has stagnated at this level for the last three years. Maharashtra is far ahead of the other two States in regard to infant mortality rate, at 45 per 1000 live births and a decennial decrease of (-) 25 per cent.
Life expectancy at birth for both males and females of Maharashtra is also better than the other two States and the national average. Life expectancy of males in Maharashtra is 65.3 years.
For females it is 68.1 years. Tamil Nadu is close with 65.2 and 67.6 years respectively. But with a decennial growth of 3.82 per cent for males and 4.32 per cent for females it will soon overtake Maharashtra's 2.35 per cent and 2.87 per cent.
This trend of increase in life expectancy and declining infant mortality will lead to an increase in the population of aged persons (60+) and States need to gear up for this.
When we consider the fact that the per capita spending on medical and public health was just Rs.150.6 in Maharashtra compared to Rs 155.2 by Gujarat and Rs 160.8 by Tamil Nadu, Maharashtra's growth can be deemed significant.
The Census 2001 indicates that among the three States, Maharashtra has a relatively impressive growth in literacy.
It is ranked second in literacy rate after Kerala (90.9 per cent) with 77.27 per cent. Tamil Nadu has a literacy of 73.47 per cent and Gujarat 69.97 per cent.
Central Plan Assistance and the Grants during 2000-03
Whatever the internal resource generation by the States, they ultimately depend on the Central Plan and non-Plan assistance and grants to carry forward development. It often seems the expectations of the State governments are met or not due to partisan political reasons. It has always been the case that similar governments at the Centre and the State have proven to be beneficial for the latter. One finds that Gujarat has been the greatest beneficiary of this equation since 1992. During the inception of the Eight Plan, Gujarat was ruled by the Congress as also the Centre, which was not the case for Maharashtra and Tamil Nadu. Following the Eight Plan, Gujarat was lucky to have the same governments at the Centre and the State.
This seems to have helped Gujarat mobilise more resources for the State under Five-Year Plan allocations. From the Eight Plan, Gujarat has been allocated a total of Rs 16,630 crore, whereas Maharashtra, with a higher population, has been allocated Rs 13,281 crore. Tamil Nadu also has received a much lower allocation than Gujarat at Rs 12,444 crore. If we look into the per capita allocation in the States during the period, it is Rs 32,869 for Gujarat, followed by Tamil Nadu with Rs 20,025 and then Maharashtra with a paltry Rs 13,727. This indicates that politics has cost Maharashtra dearly.
Even in terms of grants and loans from the Centre, Gujarat has got more than Maharashtra. The per capita grant received by Gujarat in 2000-03 was Rs 1366.1, followed by Tamil Nadu's Rs 777.9. Maharashtra received less than half of what Gujarat got at Rs 618.2. The net per capita loan received by Gujarat was also highest with Rs 1,222.3, followed by Tamil Nadu with Rs 264.8 and Maharashtra had only Rs 141.4 during 2000-03.
The patterns of spending by the three States are distinct and reveal their priorities. Maharashtra accorded the highest priority to education, Tamil Nadu to health and Gujarat to infrastructure. The per capita spending on infrastructure was highest in Gujarat at Rs 791, followed by Maharashtra (Rs 365) and Tamil Nadu (Rs 219) in 2000-03. In contrast to the spending on , Gujarat's spending on education was the lowest at Rs 710 per capita; Tamil Nadu was little ahead at Rs 728 while Maharashtra spent the most at Rs 973.6 during 2000-01. Tamil Nadu spent the most on health at Rs 160.8 per capita, followed by Gujarat with Rs 155.2 and then Maharashtra at Rs.150.6.
In spite of the impressive growth achieved by all three States the last decade, they remain victims of rising fiscal deficit and domestic debt. The revenue expenditure is on the rise, because a large proportion of it goes for interest payment.
Maharashtra spends the highest in terms of interest payment. But the picture of debt makes it clear that Gujarat has the highest amount of pending internal debt during 2002-03 with Rs 23,082 crore, followed by Maharashtra with Rs 22,794 crore and Tamil Nadu had Rs.14,568 crore during 2002-03. The debt-GDP ratio provides the true picture about the financial health of an economy. The debt-GDP ratio of Gujarat in 2002-03 was high compared to Maharashtra.
In 2002-03, Gujarat's debt-GDP ratio was 16.69 per cent , whereas for Maharashtra it was a low 7.72 per cent. However, the growth in internal debt in all three States is on the rise.
Maharashtra's growth of internal debt was 55 per cent followed by Tamil Nadu with 35 per cent, but here Gujarat had comparatively small rise in debt of 7.87 per cent in 2001-03. For reasons not clearly understood, Maharashtra made the highest annual interest payment of Rs 7,286.1 crore in 2002-03 followed by Gujarat with Rs 4,944.4 crore and Tamil Nadu with Rs 3,907 crore.
Economic performance and the trend of social indicators provide enough justification to accord top position to Maharashtra among the three in the last decade. Gujarat keeps rising industrially and Tamil Nadu has higher investment in information technology, but Maharashtra has registered growth in traditional areas such as agriculture, which provides livelihood to the maximum population.
This factor has helped Maharashtra achieve higher level of per capita income, higher agricultural production and growth in SGDP.
The analysis of all the socio-economic indicators helps us to arrive at a conclusion that Maharashtra has performed better economically and socially than the other two States.
(The authors are with the Centre for Policy Alternatives Society, New Delhi.)
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