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In terms of per capita GDP Karnataka, Bengal fastest growing States

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Sudhanshu Ranade

Chennai, June 8

RANKED by per capita GDP in 1993-94, the top five States were Punjab, Maharashtra, Haryana, Gujarat and Tamil Nadu, in that order.

By 2001-02, 10 years into the reforms, per capita GDP in Maharashtra was only Rs 300 per year less than per capita GDP in Punjab, as against almost Rs 700 earlier. And Gujarat had overtaken Haryana for slot number 3; no doubt only by a hundred rupees, but then it was Rs 1,300 per annum below Haryana in 1993-94.

This slide in the relative positions of Punjab and Haryana reflects the fact that reforms did more to spur the non-agricultural sectors of the economy rather than the agricultural sector.

Agriculture accounted for high proportions of the GDP in Punjab and Haryana in 1993-94; 46 per cent and 42 per cent respectively. However, agriculture in these two leading agricultural States grew only slowly over the period 1993-94 and 2001-02, by 16 per cent and 11 per cent respectively. Indeed, even slower than the national average of 17.5 per cent.

In other words, agriculture seems to have grown more rapidly than the `granary' States in other States that are thought to be relatively less important so far as agriculture is concerned. The growth recorded in the agricultural sector over the period was 33 per cent in Karnataka, 24 per cent in West Bengal, and 22 per cent in Andhra Pradesh .

The only reason why Punjab and Haryana did not slide much further, is because their industrial and services sectors grew much more rapidly than agriculture. In the case of Haryana, in fact, both these sectors grew at a rate above that of India as a whole.

In general, States that had large and dynamic industrial and service sectors grew more rapidly than those in which the agricultural sector had a large weightage in the initial year, no matter how relatively good the rate of growth of agriculture was.

The basic reason seems to be the high growth achieved by Karnataka and West Bengal in the services sector (both States recorded a 74 per cent growth over the period), and, comparatively speaking, in the agricultural sector.

(This article was published in the Business Line print edition dated June 9, 2005)
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