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

Relative per capita income remained the highest in Delhi, Telangana, Karnataka and Haryana, and the lowest in Bihar, the paper, authored by EAC-PM Member Sanjeev Sanyal and Aakanksha Arora, said. In 2023-24, Delhi’s relative per capita income was 250.8 per cent, indicating that the average income was 2.5 times more than the country’s average. The Capital also had the highest per capita income in 1960-61 at 218.3 per cent of the national average.

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.

West Bengal mirrored its declining economic share with a drop in relative per capita income as well, to 83.7 per cent of the national average in 2023-24, from the third-highest in 1960-61 when it was 27 per cent higher than the national average.

Odisha, traditionally viewed as a laggard state, saw its relative per capita income rising from 55.8 per cent in 2000-01 to 88.5 per cent in 2023-24.

While Punjab and Haryana gained from rise in income levels after the green revolution in the 1960s, Punjab did not keep pace with the national average and its economic trajectory diverged completely from Haryana, the paper said. Punjab’s per capita income was 106.7 per cent of the national average in 2023-24, down from 119.6 per cent in 1960-61. On the other hand, Haryana’s relative per capita income stood at 176.8 per cent in 2023-24, up from 106.9 per cent in 1960-61.

Among the smaller states, Sikkim and Goa registered “remarkable improvements”, the paper said. Sikkim’s per capita income surged from 93 per cent of the national average in 1990-91, to 319 per cent in 2023-24. Similarly, Goa’s relative per capita income doubled from 144 per cent in 1970-71 to 290 per cent in 2023-24. “They are now India’s richest states measured in terms of per capita incomes,” it said.

For the analysis, the share in national GDP has been taken as the ratio of a state’s Gross State Domestic Product (GSDP) to the sum of GSDP of all states. Relative per capita income has been calculated as the percentage of per capita Net State Domestic Product (NSDP) of the state to the all-India per capita Net National Product (NNP) or per capita Net National Income (NNI). All the data used in the analysis is at current prices to compare only relative performance, not real growth rates.

The paper comes at a time when the government is expected to begin its next Census exercise, and builds on the recent debate by several southern states that they contribute a higher share to India’s GDP but get a lower share in taxes under the Finance Commission formula.

Maharashtra, Gujarat, Delhi and Haryana have shown steady performance over the last six decades, the paper said. “Maharashtra’s economic performance has remained relatively steady throughout the period, despite a slight decline in its share over the last decade. Nevertheless, it continues to hold the highest share among all states. In contrast, West Bengal began losing its share as early as the 1960s, with its decline persisting even after economic liberalisation. By 2023-24, West Bengal’s share had dwindled to just 5.6 per cent, down from 10.5 per cent in 1960-61, marking the largest decline in India’s GDP share among states,” it said.

In the 1960s, five states — Uttar Pradesh, Maharashtra, West Bengal, Tamil Nadu and Bihar — accounted for about 54 per cent of India’s GDP. Uttar Pradesh (then undivided) was the largest economic powerhouse, contributing 14.4 per cent of India’s total GDP. This was followed by Maharashtra (12.5 per cent), West Bengal (10.5 per cent), Tamil Nadu (8.7 per cent) and then undivided Bihar (7.8 per cent).

In the south, Karnataka and Telangana emerged as economic powerhouses in the post-liberalisation period, the paper said. Karnataka’s share in India’s GDP increased to 8.2 per cent in 2023-24, from around 6.2 per cent in 2000-01. It was 5.4 per cent in 1960-61, and remained almost the same until 1990-91. Undivided Andhra Pradesh (Andhra Pradesh plus Telangana) now accounts for 9.7 per cent of the GDP, an increase of 2.1 percentage points since 1990-91, mostly accounted for by Telangana.

Kerala seems to be the only southern state which saw its share in the GDP dip, the paper said. While the state’s share increased from 3.4 per cent in 1960-61 to a peak of 4.1 per cent in 2000-01, it has since dipped to 3.8 per cent in 2023-24, it said.

The paper said the eastern states remain a concern. “West Bengal has experienced a continuous decline in its relative economic performance over several decades. Although Bihar’s relative position has stabilised in the last two decades, it remains significantly behind other states and requires much faster growth to catch up. Conversely, Odisha, traditionally a laggard, has shown marked improvement in recent years. Overall, maritime states have clearly outperformed the other states, with the exception of West Bengal,” it said.