Three states, one empirical test and one decisive answer

Written By: G Ramachandran
Delhi, India Published: Nov 01, 2018, 09.49 AM(IST)

File photo: Electronic voting machine. Photograph:( Zee News Network )

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Elections in Chhattisgarh, MP and Rajasthan are not just politically significant, but they are equally significant from the perspective of economic development, and the impact of governance on development.
 

Chhattisgarh, Madhya Pradesh and Rajasthan will conduct elections to their legislative assemblies over the next seven weeks. Chhattisgarh will be the first to switch on the electronic voting machines (November 12) and will be followed by MP (November 28) and Rajasthan (December 7). The elections to these states are politically significant. They are equally significant from the perspective of (1) economic development, (2) diversity of livelihoods, (3) incomes of households, and (4) the impact of governance on development, rural livelihoods, urban livelihoods and incomes.

The results will answer three questions pertinent to electoral outcomes and economic governance. Chhattisgarh, MP and Rajasthan are not similar to one another. They have serious dissimilarities, though they have been historically and erroneously grouped as India’s economic laggards.

The three states share three significant similarities. First, they have no coastline. Second, their rural households are in a tight range between 73.27 per cent and 74.53 per cent of the total households. By contrast, rural households constitute 67.69 per cent of India’s total households. This rural bias has weighed down heavily and for long on them. Third, all three states have incumbent governments constituted by the same party that governs India now.

The three questions pertinent to electoral outcomes and economic governance will be presented through this summarised assessment of the performance of the incumbent governments of the three states. This assessment is based on the proportion of households with annual incomes (1) below Rs 75,000, (2) between Rs 75,000 and Rs 2,00,000, (3) between Rs 2,00,000 and Rs 3,00,000, (4) between Rs 3,00,000 and Rs 4,00,000, and (5) above Rs 4,00,000.

Each state’s performance is compared with India’s performance. The data are not adjusted for inflation, population growth and migration since such adjustment is unnecessary for cross-sectional comparison.

The first assessment: All three states have performed discernibly better than all of India in the two periods 2011 to 2014 and 2014 to 2017. All three states had accelerated development between 2014 and 2017. There was a 141 per cent growth in the number of rural and urban households that moved from the below-poverty group to the middle-income group across India. By contrast, Chhattisgarh moved 235 per cent more from the below-poverty group to the middle-income group. MP moved 237 per cent more; Rajasthan moved 210 per cent more. The curative impact on the causes of poverty has been comprehensive in the three states.

The first question: Are accelerated poverty reduction and income growth the results when the states and India have incumbent governments constituted by the same party?

The second assessment: All three states have performed discernibly better than all of India in the two periods 2011 to 2014 and 2014 to 2017 in pushing rural households into prosperity. All of India posted a 780 per cent growth in the number of rural households with annual incomes above Rs 4,00,000. By contrast, Chhattisgarh moved 819 per cent more from the middle-income group to the above Rs 4,00,000 group; Madhya Pradesh moved 947 per cent more; Rajasthan moved 921 per cent more. The second question: Is the objective of accomplishing rural prosperity better served when the states and India have incumbent governments constituted by the same party?

The third assessment: Chhattisgarh and MP have dazzled by building a strong rural middle-income group. All of India posted a 759 per cent growth in the number of rural households that moved to the middle-income group from below Rs 75,000. By contrast, Chhattisgarh moved 1,438 per cent more to the middle-income group; MP moved 1,412 per cent more. Rajasthan moved merely 728 per cent more, which is lower than India’s 759 per cent. This performance pertains to the rural middle-income group. However, Rajasthan has posted a 722 per cent growth in the number of urban households that moved to the above Rs 4,00,000 group. By contrast, all of India has posted a 394 per cent growth in the urban households that moved to the above Rs 4,00,000 group. Rajasthan has strengthened its base for manufacturing, mining and tourism-cum-hospitality since 2014. It has facilitated the economic migration of households from rural-agrarian activities to urban-industrial and urban-services activities. Rajasthan has outperformed all of India in enabling its households to move to lower income risk and higher value addition.

Economic variety and heterogeneity are strengths. They reduce the riskiness of household incomes and the aggregate economic risk of the state. Moreover, Rajasthan comprises five different agro-climatic zones (ACZs) that are exposed to higher event risk and failure. By contrast, Chhattisgarh and MP comprise merely one ACZ and three ACZs. Rural incomes in Rajasthan are by nature risky. The third question: How should incumbent governments create, orchestrate and communicate economic policy when the state needs more economic variety and heterogeneous vigour? Is economic migration wrong? It is apt that the three questions will be answered on the same day, December 11, 2018.
 

(This article was originally published on DNA. Read the original article)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)
 

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