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Let us celebrate during this Sankranthi Festival, the emergence of Bihar and other lagging states as miracle economies. This is surely one of the biggest achievements of the decade. |
Agricultural growth in 2004-09 averaged 4.4% per year, the highest in any five-year period, benefiting the rural masses. The minimum wage was raised in most states.
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Historically, the chronically poor states were Orissa plus the BIMARU quartet (Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh). Have these eight poor states participated in India’s boom?
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Yes, absolutely. Indeed, five of India’s eight ultra-poor states have become miracle economies, defined internationally as those with over 7% growth. The best news comes from Bihar, historically the biggest failure. From 2004-05 to2008-09, Bihar averaged 11.03% growth annually. It was virtually India’s fastest growing state, on par with Gujarat (11.05%). That represents a sensational turnaround. |
In Bihar, GDP actually declined by 5.15% in 2003-04. So, if we average its data over the last six years rather than five years, its growth rate drops to 8.33%. This is still a stellar performance, but no longer on par with Gujarat’s.
Between 1999 and 2004, real SDP in Bihar grew by 3.9%. Between 2004 and 2009, real SDP in Bihar grew by 11%. The annual decadal (1991 to 2001) rate of population growth in Bihar was 2.8%, though it may be lower now. 3.9% growth means roughly 1.1% per capita income growth, while 11% growth means roughly 8.5% per capita income growth. Between 1999 and 2004, real agricultural SDP growth was 2%, while between 2004 and 2009, it was 5.6%.
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Rajasthan had a spectacular 28.67% growth in 2003-04. So, if we average data over six years instead of five, Rajasthan’s growth rate gets revised massively to 9.99%, an excellent performance.
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| Other lagging states have done very well too. Uttrakhand (9.31%), Orissa (8.74%), Jharkhand (8.45%) and Chhattisgarh (7.35%), have all grown faster than the standard miracle benchmark of 7%. The excellent news is that UP’s growth rate has risen impressively to 6.29% annually. |
Rainfed states experience enormous swings in growth depending on the monsoon, and can swing to negative rates in a bad year. So, averaging growth rates over five years is sometimes not enough to establish a trend.
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| The overall picture from 2000-01 to 2008-09 shows that topping the ranks of the 21 major states, were Haryana (9.1%), Uttarakhand (9.1%), Gujarat (8.8%) and Bihar (8.1%). |
Average numbers for the decade show that while overall annual growth in the richest states was 7.4%, that of middle-income states was 6.7% and that of the poorest states was 5.7%.
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CIFA Presents proposals to F M for inclusion in the budget
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Agriculturists, including farmer leader Sharad Joshi and Consortium of Indian Farmers Association (CIFA) Secretary-General Chengal Reddy and International Food Policy Research Institute Director (Asia) Ashok Gulati asked the Finance minister on 6th Jan, to review the working of the farm debt waiver scheme and rationalise fertiliser subsidy.
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Reddy said he had asked for incentivising the mechanisation of agriculture through tax exemptions on agriculture and water conservation equipment, and removal of service and processing charges on farm loans.
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Gulati told reporters he had asked for incentivising direct buying by retailers or cooperatives from farmers, so that the value chain could be compressed. “You will be able to give benefit to consumers as well as farmers only when the value chain is compressed. At present, farmers do not get a third of what consumers pay,” he said. BS 070110
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| Top 5 per cent of households account for 23 per cent of the total income, but 50 per cent from the bottom account for only 19 per cent |
| Income : |
| CMIE’s data, which estimates household income directly and by including incomes of all household members and not just the head of household’s, finds the average per household income in India in 2008-09 was Rs 1,40,000. |
| Income is distributed unequally for sure, but the inequality is not as sharp as many think. The richest 5 per cent of households account for 23.1 per cent of the total income, and 50 per cent of households from the bottom account for 18.7 per cent of the total income. But 58.2 per cent of the total income is earned by a significantly large bulge in the middle — 45 per cent of households. |
| Expenditure : |
| Food expenditure commands just over 25 per cent of household annual income, while power and fuel account for 7.6 per cent, and transport expenses eat up 1.74 per cent. |
| The share of health expenditure is 1.5 per cent, and that of education expenditure, 3.21 per cent. Paying off bank loans (expenditure under equated monthly instalments) takes up 1.4 per cent of total household annual income. |
| Savings : |
| Around 59% households are investing households. The national household savings rate is a very healthy 40%. There are interesting variations among states. Delhi and Maharashtra are high savings states (48 per cent and 50 per cent savings rates, respectively, higher than the national average), while Bengal and Andhra Pradesh (28 % and 22%) are significantly low savings states. |
| Households classified by ownership of consumer durables also reveal interesting data. Kitchen appliances — nearly 43 per cent of Indian households own one or more of appliances that range from refrigerators to toasters. 65 per cent of households own a TV. |
| Borrowings : |
| One bit of data shows how far India has to travel to become a modern economy: while over 26 per cent of households described themselves as borrower households, of these over 70 per cent borrowed from friends/relatives/moneylenders and just over 25 per cent from banks. I E-Jan 04, 2010 |
| Harayana-Farmers Friendly Initiatives : |
| In Harayana, the year 2009 saw implementation of several pro-farmer and pro-poor initiatives of the state government like bringing down of the rate of interest on crop loan from 7% to 4% and a rebate of 2% and 3% to those who got agriculture and non-agriculture loans between March 1,2009 and February 28,2010 and repay loans on time. Similarly all those farmers who get crop loans during 2009-10 and repay the same on time will get 1% interest rebate thus bringing the effective rate on crop loan to merely 4%. |
| KRSR/ANB/100110 |
