Regions have resurfaced as a critical place for the control of economic development and wealth creation. According to Michael Kitson et al. (2004), regions should be compared in terms of economic performance, since such a comparison may provide an explanation for why regions vary in economic success. Moreover, per-capita GDP is seen as the primary outcome of competitiveness factors as discussed by the findings of Gina Dimian and Aniela Danciu (2011). Insights from the study reveal that the productivity or efficiency with which inputs get translated into commodities and services, determines competitiveness.
It may be examined in terms of revenue, employment and its drivers, ranging from traditional production variables to soft factors like human capital, research and development and information dissemination. Finally, it concludes that countries such as China, India, Brazil, the Czech Republic and Poland have profited from macroeconomic stability, investment in education and research and sound economic policies in the present economic climate.
Indian states are larger than most of the countries not just in terms of population but also in terms of GDP. India is home to some of the most populated states, such as Uttar Pradesh and Maharashtra, (often termed as provinces/counties) in the world. Previously, we have discussed differences between Maharashtra and Uttar Pradesh in terms of the four aspects of the diamond model. To examine differences across regions in India, we take up the case of the two states once again. Home to more than 23.3 crore people, the size of the population of Uttar Pradesh is equivalent to the European Union’s three major countries, Germany, France and the United Kingdom combined.
In 2019-20, Uttar Pradesh’s GSDP was equivalent to Algeria (about $167 billion). Maharashtra’s population is equivalent to that of Russia’s, and its GSDP was equivalent to that of Vietnam’s (about $313 billion). If we examine differences in district domestic products for both states, we find that four out of 34 districts – Mumbai, Thane, Pune and Nashik – together contribute to more than 50 per cent of Maharashtra’s GSDP. Out of this, about 20 per cent of the contribution is directly from Mumbai (including Suburban). Whereas in Uttar Pradesh, Gautam Buddha Nagar has the highest share, i.e., 8.91 in Uttar Pradesh’s GSDP, and the share of the rest of the 65 districts is less than 4 per cent.
Maharashtra’s per capita income in 2019-20 was Rs 1,45,165, with 45.22 per cent of its population living in urban areas. Uttar Pradesh’s per capita income, on the other hand, is Rs 43,503, and the state’s population is predominantly rural, with 22.6 per cent of the population living in urban areas. On external factors such as exports, Uttar Pradesh’s contribution was 5.61 per cent, whereas for Maharashtra it was 19.9 per cent in 2020-21. These differences magnify further at the district level when we look at export data for both states. We observe that Gautam Buddha Nagar of Uttar Pradesh contributed more than 2.1 per cent to India’s exports, while the rest contributed less than 1 per cent. On the other hand, the combined contribution of the five districts of Maharashtra – Mumbai Suburban, Mumbai City, Pune, Thane and Raigad – to India’s export share was about 13.5 per cent.
A compact comparison of these two states itself outlines the issue of heterogeneity, which is reflected in about 100 districts (when combined for Uttar Pradesh and Maharashtra).
Just 100 districts out of over 760 have substantially contributed to India’s progress. There is a noticeable difference across Indian districts. As discussed above, even Maharashtra, the state with the greatest degree of wealth in the country, with a GDP equivalent to Vietnam’s, has a significant economic difference across its districts. Its top three districts account for more than 30 per cent of the state’s GDP. Similar trends may be seen in districts across the nation. These variances in trajectory will vary from district to district across states, and the discrepancies will become apparent when we look at the districts’ rural-urban gap.
These differences are further magnified when we move to the northeastern part of the country. Given the challenge and opportunity at hand, it is imperative to examine the differences at a sub-national level. There is a need to concentrate on the state’s growth-paradigm landscape in order to resolve differences in district growth, wealth and other key features. Fostering regional economic and social development requires a bottom-up strategy considering the many differences at the sub-national level across several measures. The district population of India is comparable to that of several economically successful countries, reflecting the country’s tremendous untapped potential. In this regard, it is clear that the goal of a $5 trillion economy can only be reached by realising the full potential of the states.
Excerpted with permission from The Elephant Moves: India’s New Place in the World, Amitabh Kant and Amit Kapoor, Penguin India.