The Southern Slowdown
July 20, 2007
There is a widely held sentiment among us South Indians that the four southern states are marching to the faster beat of a different drummer than the rest of India, when it comes to development. Many well known south Indians, like the historian and cricket aficionado Ramachandra Guha, have even written, with little concealed glee, about this. Guha rhapsodizes (Outlook, July 19) that "it appears that by most indicators of development the south of India is comfortably ahead of the north." How good you are invariably depends upon who you are compared with. Thus when compared with the conventionally accepted notions of what constitutes the North, East and West, South India does look good.
The average per capita income of the four major South Indian states of Rs.25027 places it well above the national average of Rs. 23223 and well above the politically significant UP where the per capita income is just Rs.11477. Bihar's is a little more than half that of UP. These two states account for about a quarter of our MP's and it is small wonder then that they have generally dominated our politics. Has the size of their political footprint influenced the economics of allocation? For in recent years this supposed performance of South India has given rise to a sentiment among us South Indians that it is the "others" who are holding us down. Many of us South Indians have come to believe that UP and Bihar have managed to corner much of the public expenditure and often this has been at "our" expense. The reality is this is not so.
Take the Tenth Plan as a case in instance. The quantum of the allocation for UP was Rs.59708 crores while it was Rs.21000 crores for Bihar. Compared to this AP got Rs.46614 crores; Karnataka Rs.43558 crores; Tamil Nadu Rs.40000 crores; and Kerala Rs.24000 crores. This is not at all bad going for a region whose total population was 223 million (2001 census) as opposed to UP and Bihar which together accounted for 249 million. This trend is apparent from the very first Plan. The consequence of this is apparent in the average annual per capita development expenditures in UP and Bihar (2001-4) which were Rs.3786 and Rs.3206 respectively as opposed to the South where the average has been Rs.7780. So this notion that the South suffers UP and Bihar has to be thrown out lock, stock and barrel. If there is a basis for feeling aggrieved, it is the people of the Gangetic plains who should have it.
Now let's get back to as to what exactly are the North, South, East and West in India. The conventional wisdom has the North to be UP, Uttarakhand, Punjab, Haryana, Himachal Pradesh and J&K. The East consists of Bihar, Jharkhand, Orissa, West Bengal, Assam and the assortment of small Northeastern states. The West consists of Gujarat, Maharashtra, Goa and Rajasthan with MP and Chattisgarh making up the Centre. These are ethnically, culturally and linguistically diverse states and are only lumped together for visual convenience on the map. For instance how can Rajasthan be in the West when it has more in common with the North? Or why is Bihar a part of the East when geographically and culturally it has more in common with UP? This manner of dividing India defies logic.
Only the South is a geographically, ethnically, culturally and historically contiguous region, and therefore can be banded together as into one zone. Likewise the Hindi speaking states of Bihar, MP, Rajasthan and UP, sometimes known as the bimaru states can be banded together, and who wouldn't look good compared to them? But this is not the North. Let us now delve into this a bit further and see how the North gets weighed down by UP. With the exception of J&K all other northern states have higher per capita incomes than each one of the southern states. Thus, take out UP from the North and the South doesn't look too good. Take out Rajasthan from the West and once again the South doesn't look good.
For the purpose of useful analysis (from the southern perspective) it would make eminent sense to discard the conventional and bureaucratic division of India and break up India into High Income India (HII) consisting of Gujarat, Haryana, Himachal, Maharashtra and Punjab; and Low Income India (LII) consisting of Assam, Bihar, J&K, MP, Orissa, Rajasthan and UP and see how the South compares with them. This is exactly how this issue was approached in the study "Socio-Economic Security of Peninsular India" done jointly by the Centre for Security Analysis, Chennai and the Centre for Policy Alternatives, New Delhi. In this detailed analysis, all states with a per capita income higher than the national median (Rs.23359 at current prices in 2003) are considered to be high income and those below it are deemed low income.
Now when we compare the performances of the southern states with HII and LII we get a set of very different performances. While HII grew at 6% for the decade 1993-2003, South India grew by 5.78%. The worst performing state in South India was Tamil Nadu which clocked a growth of just 4.82% as opposed LII which grew at 4.59%. South India which accounts for 21.7% of India's population accounts for 22.5% of its GDP, while HII which accounts for 27.2% of the population accounts for 34% of the GDP. Not surprisingly HII is more industrialized, deriving 27% of its GDP from Industry as opposed to South India which derives just 21%.
Consequently the per capita industrial output of HII - Rs.19240, was well ahead of the South's Rs.12547. Not surprisingly, the per capita value addition in industries for HII was Rs.2748 as opposed to Rs.1850 for the South. In fact High Income India contributes a huge 47.8% to India's total value addition while the South adds a mere 25.6 to it. And it's not as if there was a paucity of commercial funds to impede the South's march ahead. The average credit/deposit ratio for the South was 66.5 while it was 49.2 for HII and only 39.8 for LII. Tamil Nadu enjoyed India's highest CDR which at 89.6 put it even ahead of Maharashtra, India's most industrialized state.
We south Indians have also generally internalized the notion that the South is better governed than the North. One finds it hard to see any difference in abilities or proclivities of a Mayawati or Jayalalitha, or a Rajashekhar Reddy or a Prakash Singh Badal. There is little to pick between a Karunanidhi or Amarinder Singh or Mulayam Singh. But is the southern bureaucracy any better? The facts don't favor this notion. The Public Administration to NDSP ratio for the South is 4.60 as opposed to 4.22 for HII.
But the South spends less on salaries from its revenue expenditures which at 34.2% is less than the 37.2% that HII earmarks for salaries. Consequently South India spends more of its expenditures on development (63%) as opposed to HII which spends 56.3%. However Punjab, Haryana and Himachal Pradesh spend more per capita on development than the southern states which spend Rs.3823 per capita. But then south Indians get more per capita as grants from the Centre than all other Indians, with the exception of those in the special category states such as J&K, Assam and in the Northeast. What would come as a surprise to all south Indians is that HII has a higher average literacy (71.2%) when compared to South India (70%). More surprisingly in the critical 15-24 years cohort, HII (82.5%) does far better than the South (75.5%). But the silver lining is in that south Indians live longer and have a far better infant mortality rate than all others.
What should cause us most concern is the fact that we are fast getting crowded out in India because the South's population growth will taper off the earliest. Its population growth started falling as early as 1961. Thus by 2016 South India's growth will drop to 0.84% while India as a whole will grow by 1.4%. This implies that South India's population will start contracting and graying before mid-century while the rest of India will continue to grow well beyond that.
There are several consequences possible. Most important is that while the population density of India has gone up by 43 to 417 in the decade 1991-2001, that of low income India has grown by 102 to 486. West Bengal (904), Bihar (745) and UP (663) are now overcrowded will only get further crowded, suggesting a large-scale internal migration is in the cards, if not already underway. Relate this to the indifferent economic performance of UP and Bihar, and the earlier graying of South India and we can forecast that this is almost a certainty. Shouldn't we be losing some sleep over this instead of thumping our chests over unwarranted notions?
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