Development distances among states should drive reforms now

Large development gaps among states present challenges but also opportunities to learn from others and address weaknesses

- SUDIPTO MUNDLE

The 1991 structural reforms, designed to transform India’s economic policy framework from a highly dirigiste system to a more liberalized, market-oriented system, mainly addressed the policy and regulatory framework at the national level. Much still remains to be done at that level. However, the next phase of reforms will have to be directed at reforms in the states. Structural reforms at this level have hardly been addressed, barring some piecemeal efforts in a few states.

It is important to note in this context that there are very large differences in levels of development across Indian states, in some ways larger differences than those among different countries of Europe. To illustrate, the per capita income in Goa is seven times higher than in Bihar. Even if we exclude small states like Goa and Delhi as ‘special cases’, huge gaps remain, Haryana’s per capita income is five times that of Bihar.

Per capita income by itself is an inadequate measure of development, but similar large differences are seen in levels of social development and infrastructure services as well. At 75 years, the life expectancy in Kerala is ten years longer than 65 years in Uttar Pradesh (UP). In education, primary-level enrolment rates are 90-100% in most states, but large differences appear at higher levels. Enrolment in higher education is over 51% in Tamil Nadu, compared to less than 15% in Bihar. Power consumption in Gujarat is seven times higher than in Bihar, while road density (state highways and district roads) is again seven times higher in Kerala than in Jharkhand.