[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

MORE MARKETS, LESS GOVERNMENT
achievements like increase in GDP, per
capita income, foreign direct investment
and foreign exchange reserves are sufficient
conditions for the over all development
of the nation and its nationals.
These on-going economic reforms with
stabilization and deregulation policies
as their central pieces seem to have further
widened the regional disparities.
The impact of globalization and privatization
is not uniform across economies
and also across different sections of the
population within an economy. Market
economy is not meant for the equal distribution
of wealth, it is an uneven process
with unequal distribution of benefits
and losses, both across the countries and
within a country across different income
groups: the rich get richer and everyone
else gets poorer, many absolutely and
the rest in relation to the rapidly growing
wealth of the rich. It has distorted
investment priorities, for wealth gets directed
into areas wherein it will earn the
largest profit and not into spaces that
most people really need (accordingly,
public health, education and other basic
social services receive little attention).
II. Analyzing Growth Across
Select Indian States
Economic reforms among other things,
implied that private sector would be the
principal engine of economic growth.
Most of the restrictions on private investment
have been removed. Mounting
debt burden of the government has imposed
a cap on public investment. As a
result, while there was significant increase
in the quantum of private investment,
there was a sharp fall in the public
investment over the last decade. This
has created even more imbalance among
different states throughout India.
For studying the effects of LPG on
regional growth and regional imbalances
among different states we have
taken indicators which have direct
bearing on social and economic development
of the nation or region. The
scope of our analysis in this article is
restricted to a comparative analysis of
the eight major States in respect to few
key parameters which have an intrinsic
bearing on social, human and economic
development. For the purpose of this
article, we have divided these states
into two groups; forward and backward.
Forward states category consists
of Andhra Pradesh, Karnataka Maharashtra,
and Tamil Nadu, the backward
states group comprises of Bihar, Madhya
Pradesh, Orissa, Rajasthan and
Uttar Pradesh. The parameters taken
to analyze the situation are per capita
income, percentage share of poor and
per capita consumption expenditure.
In order to analyze the nature of the
private players or the market mechanism
we have collected cumulative figures of
total cases of foreign direct investments
done in these states. The most important
indicator of the economic development
of a society is the Per-capita Annual Income
(PCI) generated by it. PCI is an
indicator of the level of economic development
and it measures the inequality
in the income distribution among different
regions. Per capita Gross State Domestic
Product (GSDP) as a percentage
of per capita GDP of the country for forward
and backward group of States are
presented in the Table-1. It shows the
growth in per capita incomes of the two
groups of States over the last two and
half decades, especially from 1991. All
the States in the forward group, have
improved their relative position over the
last two and half decades. One important
point is worth mentioning is that the
Per capita incomes of the three states in
the forward group category except Maharashtra
were below the national aver-
Table 1: Per-capita GSDP As A Percentage Of GDP
States 1981-82 1990-91 1999-2000 2005-2006
Forward Group
Andhra Pradesh 87.4 92.5 97.9 101.9
Karnataka 92.8 95.4 105.8 106.1
Maharashtra 143 144.7 147.4 144.2
Tamil Nadu 92.8 100 122.3 116.5
Backward Group
Bihar 58.8 53.5 36.4 30.6
Madhya Pradesh 80.8 78.1 78.2 60.8
Orissa 75 66.9 66.7 NA
Rajasthan 76.6 79.3 85.1 69.5
Uttar Pradesh 75.8 70.6 59.4 51.6
All India 100 100 100 100
Source: http://mospi.nic.in/
THE INDIA ECONOMY REVIEW
63