Steady growth in west, south states; decline in Bengal: EAC-PM report

• The per capita incomes of Maharashtra and Gujarat remained above the national average since the 1960s, with the 2023-24 data showing Gujarat at 160.7 per cent of the national average and Maharashtra at 150.7 per cent.

Highlights:

• A recent working paper by the Economic Advisory Council to the Prime Minister (EAC-PM) highlights the stark economic divergence between India’s states over the past six decades. Southern and western states have generally outperformed others, while some, like West Bengal, have seen significant economic decline.

Southern and Western States Lead:

• Maharashtra and Gujarat: These two western states consistently showed strong economic performance from 1960-61 to 2023-24. Maharashtra continues to hold the largest share of India’s GDP, despite a slight decline in recent years.
• Southern States: Karnataka, Andhra Pradesh, Telangana, Kerala, and Tamil Nadu now account for over 30% of India’s GDP in 2023-24. Karnataka and Telangana emerged as key economic hubs, especially after liberalisation.

West Bengal’s Economic Decline:

• Shrinking GDP Share: West Bengal’s share in India’s GDP has drastically reduced, from the third-largest share of 10.5% in 1960-61 to just 5.6% in 2023-24. This decline persisted even after economic liberalisation.
• Per Capita Income: Once among the highest, West Bengal’s per capita income dropped to 83.7% of the national average in 2023-24, down from being 27% higher than the national average in 1960-61.

Per Capita Income Disparities:

• Top Performers: Delhi, Telangana, Karnataka, and Haryana lead in relative per capita income. In 2023-24, Delhi’s per capita income was 250.8% of the national average, the highest in the country.
• Bottom Performers: Bihar continues to have the lowest per capita income.

Rising States and Notable Improvements:

• Sikkim and Goa: Among the smaller states, both showed remarkable improvements. Sikkim’s per capita income surged to 319% of the national average, and Goa’s doubled to 290% by 2023-24.
• Odisha: Traditionally a laggard, Odisha’s per capita income rose from 55.8% of the national average in 2000-01 to 88.5% in 2023-24, indicating steady improvement.

Other Key Insights:

• Punjab and Haryana: While Punjab’s economic growth stagnated, Haryana surged ahead. Punjab’s per capita income dropped to 106.7% of the national average in 2023-24, whereas Haryana’s increased to 176.8%.
• Kerala: Although Kerala saw an increase in its GDP share from 3.4% in 1960-61 to 4.1% in 2000-01, it has since declined to 3.8% in 2023-24.

Challenges for Eastern States:

• Eastern Concerns: West Bengal’s continuous decline and Bihar’s stagnation in the past two decades are major concerns. While Bihar’s economic position has stabilised, it remains far behind other states.
• Odisha is an outlier among eastern states, having shown improvement in recent years.

Prelims Takeaways:

• India’s GDP
• Economic Advisory Council to the Prime Minister