For computing aggregate income of respective states in India, State Domestic Products (SDP) of various states are estimated regularly for every year by its government agencies.
The data related to SDP estimates are widely in use by various agencies like Planning Commission, Finance Commission and other research organisations for assessing the degree of regional disparities and also for formulating necessary policies in connection with transfer of resources from the Centre to states.
The estimates of SDP can be successfully utilised for measuring the degree of development attained by a state. Accordingly the level of development attained by a state can also be measured by its per capita income which can again be compared with the all India average of per capita income.
The SDP estimates also work as useful indicators to show structural transformation, if any, among the constituent sectors of these states. Let us now look at the CSO estimates of per capita income of 15 major states of India to have a look at the dynamics of growth and the ratio of disparity between various states.
Table 3.7 reveals that during the 14-year period, i.e. from 1980-81 to 1993-94, the per capita income figures of most of the states, excepting a few rich states like, Punjab, Haryana and Maharashtra have gone for a little change.
Moreover, the relative ranking of the most of the states by per capita income has not shown any significant change excepting Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Rajasthan, Assam and Orissa whose relative ranking has shown a change to some extent.
During this period, the five top ranking states in respect of per capita income were Punjab, Haryana, Maharashtra, Gujarat and Himachal Pradesh.
But the five poorest states in respect of per capita income during the same period were Bihar, Orissa, Madhya Pradesh, Uttar Pradesh and Rajasthan. In 1993-94, Karanataka, Assam and Rajasthan have improved its relative position. The per capita income figure of Bihar was lowest among all the 16 states.
The table further reveals that the inter-state disparity in respect of per capita income has been widened during the 14 year period as a result of the strategy followed in planning for economic development in India. As a result of this, the disparity ratio between the richest state—Punjab and the poorest state—Bihar which was 2.91: 1 in 1980-81 gradually increased to 3.44: 1 in 1993-94.
Thus the planning process followed in India has totally failed in fulfilling one of its basic objectives of removing regional imbalances and maintaining balanced regional development throughout the country. The following table shows the disparity ratio in respect of per capita income of different states at constant prices during the recent years.
Table 3.7(a) reveals that the per capita NSDP of nine advanced states has been increasing at moderate rates (annual average) between 6.0 per cent to 2.6 per cent during 1990-91 to 2000-01. But the per capita NSDP of the backward states recorded a slow growth between 1.9 per cent to 1.0 per cent and Bihar recorded a negative growth rate of (-) 2.8 per cent during the same period.
Again, the ratio between the maximum per capita income of Punjab and the minimum per capita income of Bihar has increased from 2.74 in 1990-91 to 4.60 in 2000-01.
Table 3.8 depicts a clear picture about the per capita net state domestic product (NDP) at current prices for 17 major states along with their relative ranking. In 1980-81, the per capita state NDP of only six states, viz., Punjab, Haryana, Maharashtra, Gujarat.
Himachal Pradesh and Jammu & Kashmir were lying above the national average NDP whereas in 1991-92 only the first four above mentioned states were above the national average.
The disparity ratio between the richest state—Punjab and the poorest state—-Bihar which was 1 : 3.04 in 1980-81 gradually increased slightly to 1 : 4.90 in 2000-01. Thus it proves again that the planning process in India has failed to reduce regional disparities to a considerable extent.
Moreover, the table shows that the relative ranking of Andhra Pradesh, Madhya Pradesh, Rajasthan, Tamil Nadu, Kerala and Assam has improved considerably.
But the same ranking remained low for Uttar Pradesh, Jammu & Kashmir, Bihar. Further, the relative ranking of Uttar Pradesh, Orissa, West Bengal and J &K have even deteriorated considerably in 1995-96.
Thus the regional disparity is very much acute among the various states of India. This has been reflected by the per capita income gap between the very rich states (viz., Punjab, Haryana, Maharashtra and Gujarat) and the very poor states (viz., Bihar, Madhya Pradesh, Assam, Uttar Pradesh and Orissa).
The per capita income gap at 1980-81 prices between the richest state (Punjab) and the poorest state (Bihar) has increased from Rs 1755 in 1980-81 to Rs 2473 in 1993-94. Again the same gap at current prices has increased from Rs 1797 in 1980-81 to Rs 19940 in 2000-01 and then to Rs 30,957 in 2005-06.
Again the per capita income figure of different states in 2013-14 at current prices reveals a wide disparity among the states. The per capita income gap at current prices between the richest state Haryana (Rs 1, 32,089) and the poorest state Bihar (Rs 31,229) reached the level of Rs 1, 00, 86 in 2013-14 which can be considered as very high.
It would be better to look into this regional disparity from a different angle, i.e., through comparative rates of growth.
The growth rates of NSDP during the current period also show the trend of growing regional disparity among different states of the country. Table 3.9 reveals that the annual average growth rate of NSDP of advanced states during the pre-reform period, i.e., during 1980-81 to 1990-91 was 5.2 per cent.
But the same rate for the advanced states increased to 6.3 per cent during the post-reform period, i.e., during 1990-91 to 1997-98.
As compared to that, the annual average growth rate of NSDP of backward states in general has declined from 4.9 per cent during the pre-reform period (1980-81 to 1990-91) to 3.0 per cent during the post- reform period (1990-91 to 1997-98).
It is further observed that the annual average growth rates of NSDP of three major states Uttar Pradesh, Madhya Pradesh and Bihar declined to 2.6 per cent, 4.1 per cent and 0.6 per cent respectively during the post-reform period as compared to that of all India growth rates of 5.5 per cent during the same period.
Table 3.9 thus clarifies the position:
Overall growth rate of SDP of these above mentioned states has improved fairly due to their steady growth in either agriculture or industry or both. But the states like Kerala and Orissa had all along maintained a very poor overall growth rate of SDP during the 1970s and the first half of 1980s due to their attainment of very low growth rate in agricultural production.
Again during the first half of 1980s only six states, viz., Punjab, Haryana, West Bengal, Tamil Nadu, Rajasthan and Madhya Pradesh had been able to maintain their overall growth rate of SDP above the 5 per cent all India average growth rate of NDP.
Whereas, the other states had attained a very poor overall growth rate of SDP even to the extent of 1.1 per cent only, which were far below the all India average growth rate of NDP.
Thus it has been revealed that in most of the states excepting a few industrially developed states, agriculture is still playing the role of major determinants of their overall growth rates in SDP. Further, it is found that much disparity still prevails in the overall growth rates of SDP of the various states leading to aggressive regional imbalance or inequalities creating serious discontent and chaos in social fabric of our country.
Although historical experience shows that regional inequalities tend to increase in the early part of development and it tend to get narrowed down after attaining some level of development but the high degree of poverty and backwardness prevailing in some of the backward states of India is aggravating the situation to the worst level.
Thus unlike the developed countries of the world, India should try to reduce this degree of regional disparity or imbalances as early as possible for the interest of integrity of the country even if it is considered too early from the angle of economic development.