REGIONAL DISPARITIES IN ECONOMIC DEVELOPMENT IN NET STATE DOMESTIC PRODUCT AND PER CAPITA NET STATE DOMESTIC PRODUCT Regional disparity is a ubiquitous feature of developing countries. Economic development being a multidimensional concept, its measures are many and varied but per capita income is the most prevalent indicator for measuring economic development and it can be used as an important starting point for measuring economic development. In the present study some aspects of development have been focused on and examined and a comparison made between the pre-reform and the post reform period in terms of Net State Domestic Product (NSDP), Per Capita Net State Domestic Product (PCNSDP).In the present chapter inter-state variations in terms of income have been examined in the pre-reform and post-reform period 4.1 Net State Domestic Product State-wise (at constant prices) First of all we discuss the NSDP of the different states during the period as shown in table 4.1 (A) and 4.1 (B). It is clear from the table that Maharashtra, Uttar Pradesh and West-Bengal have been the top states in terms of NSDP. Being large states in terms of area total output these states also higher than many of the smaller states like Gujarat, Karnataka and Punjab which otherwise fare better in terms of growth and development. This superiority is maintained throughout the period under consideration as is evident from Tables 4.1(A) and 4.1(B).
75 Table 4.1(A) Net State Domestic Product State-Wise in India (At Constant Prices) Base: 1980-81 Year Andhra Pradesh Assam Bihar Gujarat Haryana Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu (Rupees crore) 1980-81 7324 2298 6349 6547 3032 5587 3823 7012 15163 3443 4449 4126 7218 14012 9594 1981-82 8510 2258 6704 7198 3145 5957 3775 7191 15519 3437 4872 4478 8011 14348 9335 1982-83 8660 2676 6766 7090 3341 6102 3869 7511 16116 3232 5015 4570 7578 15469 9704 1983-84 9022 2793 7422 8451 3412 6536 3712 7899 17128 3885 5105 5611 7988 16076 10875 1984-85 8749 2807 8117 8446 3545 7023 3942 7516 17348 3700 5502 5208 9033 16331 11145 1985-86 9303 2992 8293 8214 4181 6733 4086 8172 18714 4127 5924 5187 9391 16971 11611 1986-87 9050 2907 8950 8720 4184 7365 3993 7809 18969 4184 6131 5685 9310 17706 12072 1987-88 10274 3037 8455 7749 4110 7883 4166 8876 20248 4054 6450 5291 9893 18506 12720 1988-89 12029 3060 9523 10873 5111 8563 4584 9527 22362 4907 6792 7477 10733 20919 13264 1989-90 12986 3286 9365 10681 5178 9046 4892 9725 26051 5234 7365 7324 11468 21501 13735 1990-91 13580 3426 10253 10839 5719 9112 5262 11107 27224 4345 7505 8473 12423 22780 14458 1991-92 14342 3577 9673 9944 5837 10270 5365 10306 27139 4897 7845 7823 12755 22873 15590 1992-93 13955 3613 9100 13144 5835 10508 5752 11062 31243 4814 8215 8996 13413 23119 16054 Uttar Pradesh West Bengal Source: Central Statistical Organization (CSO) website as on 31.07.09 76
76 Table 4.1 (B) Net State Domestic Product State-Wise in India (At Constant Prices) Base: 1993-94 (Rupees crore) Year Andhra Pradesh Assam Bihar Gujarat Haryana Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal 1993-94 51655 13477 20780 42560 19422 36982 23851 33937 101767 16185 27068 28977 51643 70935 48398 1994-95 54564 13796 23163 51104 20835 38917 25908 34529 103743 16974 27746 34269 57943 74635 51761 1995-96 57951 14125 19582 52629 21254 40974 26947 36601 115188 17749 28771 35530 59861 77046 55631 1996-97 61955 14467 24569 60653 23759 44737 28026 19057 119732 16523 30890 39682 62316 85597 59496 1997-98 60321 14704 23404 60647 23965 47517 28633 41101 126339 18902 31726 44509 67822 84686 64484 1998-99 68036 14574 24879 64921 25243 53961 30644 43815 131368 19482 33552 46457 70505 85310 68598 1999-00 70904 15078 26137 65163 27064 56543 32785 48415 143863 20717 35327 46574 74685 91201 73528 2000-01 77077 15671 31363 62575 28885 62132 33963 43009 136713 20272 36636 45664 80453 91690 78254 2001-02 80864 16441 28136 68293 30444 63071 34404 47098 143314 21454 37288 50238 77920 94293 83449 2002-03 83907 17114 32953 73658 31990 65765 37549 44065 156376 21531 38224 46177 80114 100101 90077 2003-04 91838 18004 29597 86138 34868 68904 40328 51900 168776 25192 40730 59690 82720 104728 96478 2004-05 97699 19041 33460 90783 37983 76298 44055 53539 182889 27562 43122 59911 90138 109768 103362 Source: Directorate of Economics & Statistics of respective State Government - Central Statistical Organization (CSO) Uttarakhand, Jharkhand and Chhattisgarh up to 2001 are included under Uttar Pradesh, Bihar and Madhya-Pradesh respectively. 77
78 Table 4.2 Growth rates in Net State Domestic Product (NSDP) in India (1980-81 to 2004-05) States 1980-81 to 1992-93 1993-94 to 2004-05 Andhra Pradesh 5.70 5.30 Assam 3.38 2.98 Bihar 3.32 4.53 Gujarat 4.94 5.70 Haryana 6.11 6.00 Karnataka 5.52 6.80 Kerala 4.05 5.20 Madhya Pradesh 4.28 3.90 Maharashtra 6.58 5.00 Orissa 3.58 4.40 Punjab 5.23 4.20 Rajasthan 6.50 5.70 Tamil Nadu 5.33 4.60 Uttar Pradesh 4.86 3.70 West Bengal 4.70 7.10 Average (above fifteen states) 4.90 5.09 Standard deviation 1.07 1.16 Coefficient of variation (%) 21.8 22.8 Source: calculated from tables 4.1(A) and 4.1(B).
79 4.2 Growth Rates in NSDP The growth rates of net state domestic product (NSDP) for the selected states are given in Table 4.2. Average growth in NSDP of the selected states has increased from 4.90 percent per annum during the period 1980-81 to 1992-93 to 5.09 percent per annum during 1993-94 to 2004-05. The coefficient of variation which was 21.8 percent during the period 1980-81 to 1992-93 increased to 22.8 percent during 1993-94 to 2004-05. During the first decade 1980-81 to 1992-93 at 1980-81 prices it may be seen that Maharashtra witnessed the highest growth rate in NSDP at 6.58 percent p.a. followed by Rajasthan (6.50 percent p.a.), Haryana (6.11 percent p.a.), and Andhra Pradesh (5.70 percent p.a.). On the other hand Bihar (3.32 percent p.a.), Assam (3.38 percent p.a.), Orissa (3.58 percent p.a.), Kerala (4.05 percent p.a.), Madhya-Pradesh (4.28 percent p.a.) and West-Bengal (4.70 percent p.a.) have recorded growth rates lower than the average growth rate. During the second decade, i.e., 1993-94 to 2004-05 at 1993-94 prices West Bengal (7.10 percent p.a.), Karnataka (6.80 percent p.a.), Haryana (6.00 percent p.a.) Rajasthan (5.70 per cent p.a.), Gujarat (5.70 percent p.a.), Andhra Pradesh (5.30 percent p.a.) and Kerala (5.20 percent p.a.) are the states that exceeded the average growth rate. In West Bengal, Gujarat and Kerala growth rates accelerated and exceeded the average growth rate in the second decade. The performance of these states shows that a positive impact of reforms was experienced during the second decade. On the other hand in Punjab and Tamil Nadu where the growth rates were higher than the average growth rate in the first decade, but decelerated below the average growth rate in the second decade. Maharashtra also experienced deceleration in growth rate in the second decade. Assam, Bihar, Orissa, Madhya Pradesh and Uttar Pradesh experienced less than the average growth rate in both the decades.
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81 Table 4.2 and Chart 1 show the differential growth rates among the states in terms of NSDP in the pre and post-reform period. As it revealed from the table that Bihar, Gujarat, Karnataka, Kerala, Orissa and West-Bengal have improved their relative positions and acquired increased NSDP in the post-reform period. In West- Bengal drastic increase in the growth rate of NSDP was observed. In contrast, the states where the growth rate of NSDP have decreased during the period 1993-94 to 2004-05 are Andhra Pradesh, Assam, Haryana, Madhya-Pradesh, Maharashtra, Punjab, Rajasthan, Tamil-Nadu and Uttar-Pradesh. These states have experienced relative deterioration in terms of NSDP growth. Co-efficient of variation increased from 21.8 percent during the first decade to 22.8 percent during the second decade showing that disparities in growth rates of states had increased in the post-reform period. It is also clear that Kuznet s hypothesis is not applicable in India. 4.3 Levels of Per Capita NSDP across Selected States It has already been mentioned that per capita NSDP better reflects development than NSDP. Data on per capita NSDP has been taken up for study and is given in Table 4.3. The table shows that in 2004-05, for which data has been taken per capita income ranges from less than Rs.4000 (Rs.3773) in Bihar to four times more, (Rs.16, 878) in Gujarat expressed in terms of constant prices (1993-94). Average per capita NSDP (all-india average) has increased from Rs. 5352 in 1980-81 to Rs. 7321 in 1990-91 and to Rs. 10254 in 2000-01 and further to Rs. 12416 in 2004-05. The average PCNSDP (per capita net state domestic product) of the selected states has on the other hand increased from Rs. 5476 to Rs. 7147 and to Rs. 9897 and further to Rs. 11735 during the corresponding years. The discrepancy is because, some of the high income states such as Goa, Himachal Pradesh are not included in our analysis.
82 Punjab, Maharashtra, Haryana and Gujarat have had high per capita NSDP throughout the period and in the later years Gujarat s position improved and it ranked second after Maharashtra. However, in the post reform period Tamil Nadu also performed better than other states and its per capita NSDP stood above the national average. Karnataka from 1998-99 and Kerala from 1999-2000 also posted increase in their PCNSDP (per capita net state domestic product) and moved closer to the national average. Kerala that recorded above average PCNSDP (per capita net state domestic product) has maintained its favorable position throughout the whole post reform period. Thus, Kerala and Karnataka too can be included in the better off states along with Punjab, Gujarat, Maharashtra and Haryana as mentioned above. Andhra Pradesh and West-Bengal came closer to the average PCNSDP and cross it in the later post-reform period (2001-02) these states along with Rajasthan can be included in the category of intermediate states. On the other hand Assam, Bihar, Madhya-Pradesh, Orissa and Uttar-Pradesh which have below average per capita NSDP are included in the category of poorer states.
Table 4.3 Levels of Per capita net state domestic product (PCNSDP) across Selected States in India (1980-81 to 2004-05) (In Rs. at 1993-94 prices) States 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 Andhra Pradesh 5470 6169 6104 6219 5896 6063 5701 6124 6926 7094 7050 7088 6881 7418 Assam 4611 5032 5159 5277 5195 5422 5157 5270 5192 5446 5543 5655 5588 5681 Bihar 3363 3473 3429 3680 3939 3939 4162 3850 4247 4092 4391 4055 3731 3738 Gujarat 6607 7099 6840 7980 7811 7446 7753 6763 9323 9005 9022 8111 10529 9833 Haryana 7549 7641 7921 7894 8003 9213 8999 8630 10475 10363 11175 11144 10895 11142 Karnataka 5004 5211 5220 5472 5759 5411 5805 6099 6510 6764 6709 7444 7496 7895 Kerala 5635 5491 5552 5256 5509 5634 5431 5339 6033 6374 6786 6826 7221 7904 Madhya Pradesh 4260 4278 4373 4499 4191 4468 4151 4611 4835 4821 5376 4882 5139 5552 Maharashtra 8754 8752 8884 9227 9131 9623 9525 9927 10701 12163 12396 12082 13671 14590 Orissa 4066 3993 3688 4355 4075 4463 4444 4227 5023 5258 4282 4736 4570 4776 Punjab 8450 9085 9182 9178 9712 10267 10434 10777 11143 11786 11785 12088 12422 12710 Rajasthan 4284 4508 4474 5349 4835 4692 5009 4542 6283 6016 6812 6155 6927 6228 Tamil Nadu 5298 5800 5399 5595 6219 6360 6206 6498 7029 7406 7911 8028 9086 8997 Uttar Pradesh 3817 3814 4016 4077 4046 4108 4189 4281 4733 4759 4936 4861 4826 4869 West Bengal 4984 4748 4833 5293 5318 5421 5514 5682 5793 5862 6028 6372 6449 6800 All India 5352 5555 5555 5854 5956 6082 6189 6260 6777 7087 7321 7212 7433 7698 Mean 5476 5672 5671 5956 5975 6168 6165 6174 6949 7147 7346 7301 7695 7875 Standard deviation 1659 1757 1799 1783 1865 2050 2047 2094 2330 2551 2630 2616 3000 3096 C.V (%) 30.2 30.9 31.7 29.9 31.2 33.2 33.2 33.9 33.5 35.6 35.8 35.8 38.9 39.3 Contd 83
2 States 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 Andhra Pradesh 7704 8048 8467 8214 9162 9457 9982 10639 10876 11756 12352 Assam 5694 5711 5734 5796 5664 5785 5867 6122 6254 6466 6721 Bihar 3975 3552 3974 4114 4035 4123 4087 3340 3851 3396 3773 Gujarat 11603 11746 13307 12937 13493 13022 12975 13321 14194 16302 16878 Haryana 11706 11702 12827 12544 13003 13918 14331 14228 14712 15752 16872 Karnataka 8186 8497 9149 9218 10607 11254 11902 11857 12212 12634 13820 Kerala 8471 8694 8921 9079 9619 10178 10627 10762 11605 12328 13321 Madhya Pradesh 5516 5688 5923 6023 6205 6368 5760 7708 7062 8149 8238 Maharashtra 14587 15893 16408 16479 16664 18048 18166 14656 15764 16765 17864 Orissa 4886 5021 4605 5272 5165 5265 5187 5803 5747 6640 7176 Punjab 12784 13008 13705 13758 14274 14980 15390 15308 15407 16119 16756 Rajasthan 7216 7335 8037 8850 8754 8707 7937 8763 7903 10010 9853 Tamil Nadu 10016 10276 10585 11312 11817 12348 12779 12484 12696 12976 13999 Uttar Pradesh 5035 5111 5584 5497 5447 5682 5770 5603 5830 5975 6138 West Bengal 7151 7562 7963 8408 8814 9330 9778 10380 10987 11608 12271 All India 8088 8498 9036 9288 9733 10067 10254 10754 11013 11799 12416 Mean 8302 8522 9012 9166 9514 9897 10035 10064 10340 11125 11735 Standard 3202 3434 3697 3603 3786 4053 4229 3708 3940 4233 4509 deviation C.V (%) 38.5 40.2 41.0 39.3 39.7 40.9 42.1 36.8 38.1 38.0 38.4 Source: For Sl. No. 1 32 Directorate of Economics & Statistics of Respective State Governments (as on May 01, 2009) Created in 2001, Uttarakhand, Jharkhand and Chhattisgarh up to 2001 are included under Uttar Pradesh, Bihar and Madhya Pradesh respectively. It is clear from this table that Kuznet s hypothesis is not proved. 84
85 Maharashtra, Gujarat, Punjab, Haryana and Tamil Nadu have been the leading states throughout the period with only minor changes. Similarly Bihar, Orissa, Madhya Pradesh, Uttar Pradesh, Assam have been the bottom states again with some minor changes. The levels of PCNSDP (per capita net state domestic product) depict interstate disparity as shown by the increasing coefficient of variation. The coefficient of variation has increased from 32.6 per cent in 1980-81 to 38.4 per cent in 2004-05 showing increased inter-state disparity in economic development. Evidence of increasing disparity between states is reflected in a higher co-efficient of variation in per capita NSDP than in NSDP figures. Per capita income as we know is more representative of the situation. As is revealed from table 4.3 except for an initial decline in few years inter-state disparity has almost continuously risen. Increase in coefficient of variation indicates clearly that Kuznet hypothesis is disproved. The data is plotted in Fig. 1, the curve showing trends in inequalities. 4.3 (i) Trends in Inequalities Figure 1 Trends in Inequalities
86 A look at the graph in figure 1 suggests that the coefficient of variation has been below the thirty five percent till 1988-89 and has subsequently increased especially from 1992-93. The graph line in figure 1 reveals, in general, an upward trend. In spite of government policies regarding balanced regional development there has been rising disparity in the per capita income of the states more so after initiation of economic reforms in the country. 4.4 Ranks of Per Capita NSDP of Selected States These results are further confirmed in the analysis of the ranks in the table 4.3. In the whole period Maharashtra, Punjab, Haryana, Gujarat and Tamil-Nadu are the top five states with only minor movements. Similarly, Orissa, Bihar, Uttar-Pradesh, Madhya-Pradesh and Assam have been the bottom states with some minor changes. Thus, it can be said that ranking have not changed as top five states in terms of PCNSDP (per capita net state domestic product) have continued to move ahead and backward states continue to lag behind.
75 Table 4.4 Ranks of Per Capita NSDP of Selected States in India (1980-81 to 2004-05) (In Rs. at 1993-94 prices) Rank 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 1 MAH PUN PUN MAH PUN PUN PUN PUN PUN MAH MAH PUN MAH MAH MAH MAH MAH MAH MAH MAH MAH PUN MAH MAH MAH 2 PUN MAH MAH PUN MAH MAH MAH MAH MAH PUN PUN MAH PUN PUN PUN PUN PUN PUN PUN PUN PUN MAH PUN GUJ GUJ 3 HAR HAR HAR GUJ HAR HAR HAR HAR HAR HAR HAR HAR HAR HAR HAR GUJ GUJ GUJ GUJ HAR HAR HAR HAR PUN HAR 4 GUJ GUJ GUJ HAR GUJ GUJ GUJ GUJ GUJ GUJ GUJ GUJ GUJ GUJ GUJ HAR HAR HAR HAR GUJ GUJ GUJ GUJ HAR PUN 5 KER AP AP AP TN TN TN TN TN TN TN TN TN TN TN TN TN TN TN TN TN TN TN TN TN 6 AP TN KER TN AP AP KAR AP AP AP AP KAR KAR KER KER KAR KAR KAR KAR KAR KAR KAR KAR KAR KAR 7. TN KER TN KAR KAR KER AP KAR KAR KAR RAJ AP KER KAR KAR KER KER KER KER KER KER KER KER KER KER 8. KAR KAR KAR RAJ KER ASS WB WB RAJ KER KER KER RAJ AP AP AP AP RAJ AP AP AP AP WB AP AP 9 WB ASS ASS WB WB WB KER KER KER RAJ KAR WB AP WB RAJ WB RAJ WB WB WB WB WB AP WB WB 10 ASS WB WB ASS ASS KAR ASS ASS WB WB WB RAJ WB RAJ WB RAJ WB AP RAJ RAJ RAJ RAJ RAJ RAJ RAJ 11 RAJ RAJ RAJ KER RAJ RAJ RAJ MP ASS ASS ASS ASS ASS ASS ASS ASS MP MP MP MP ASS MP MP MP MP 12 MP MP MP MP MP MP ORI RAJ ORI ORI MP MP MP MP MP MP ASS ASS ASS ASS UP ASS ASS ORI ORI 13 ORI ORI UP ORI ORI ORI UP UP MP MP UP UP UP UP UP UP UP UP UP UP MP ORI UP ASS ASS 14 UP UP ORI UP UP UP BIH ORI UP UP BIH ORI ORI ORI ORI ORI ORI ORI ORI ORI ORI UP ORI UP UP 15 BIH BIH BIH BIH BIH BIH MP BIH BIH BIH ORI BIH BIH BIH BIH BIH BIH BIH BIH BIH BIH BIH BIH BIH BIH Note : AP Andhra Pradesh, ASS Assam; BIH Bihar, HAR Haryana; KAR Karnataka; KER Kerala; MP Madhya Pradesh; MAH Maharashtra; ORI Orissa; PUN Punjab; RAJ Rajasthan; TN Tamil Nadu; UP Uttar Pradesh; WB West Bengal. 87
88 4.5 Growth Rates in Per Capita NSDP As it revealed from the table 4.4 the average growth rate of per capita net state domestic product (PCNSDP) of 15 states has increased from 2.55 Percent during 1980-89 to 3.30 percent during 1990-99 and to 4.26 percent during 2000-04. Table 4.5 Growth Rates in Per Capita NSDP (1980-89 to 2000-04) States 1980-89 1990-99 2000-04 1980-2004 Andhra Pradesh 1.79 3.55 5.40 3.16 Assam 1.09 0.37 3.31 1.05 Bihar 2.53-0.02-1.42 0.09 Gujarat 2.76 5.48 7.55 3.90 Haryana 3.71 2.56 4.37 3.28 Karnataka 3.17 5.38 3.68 4.44 Kerala 1.03 4.70 6.05 4.05 Madhya Pradesh 1.25 2.59 8.01 2.72 Maharashtra 3.12 4.33 1.01 3.48 Orissa 2.92 1.89 8.15 1.88 Punjab 3.49 2.50 2.24 2.73 Rajasthan 3.21 4.13 5.81 3.56 Tamil Nadu 3.46 5.17 2.23 4.44 Uttar Pradesh 2.39 1.92 1.89 2.02 West Bengal 2.33 5.00 5.82 3.98 India 2.89 4.08 4.86 3.54 Average 2.55 3.30 4.26 2.98 Standard deviation 0.89 1.78 2.77 1.26 Coefficient of 34.9 53.9 65.0 42.2 variation Source: Calculated from Table 4.2
89 Tamil Nadu and Karnataka recorded the highest growth rate of 4.44 per cent per annum for the 24 year period. Other states that also recorded high growth rates are: Kerala (4.05percent), West Bengal (3.98 percent), Gujarat (3.90 percent), Haryana (3.28 percent) and Rajasthan (3.56 percent) while PCNSDP (per capita net domestic product) of Bihar (0.09 percent) and Assam (1.05 percent) was very low during the same period. The state of Bihar registered a lower growth rate in the post reform period in comparison to pre- reform as the growth decreased from 2.53 percent to -1.42 percent. On the other hand Orissa recorded 1.88 per cent growth in its Per capita NSDP. Uttar Pradesh (2.02 per cent), Madhya Pradesh (2.72 per cent) and Punjab (2.73 percent) were the states where the growth was below the national average. It is observed that, Andhra Pradesh, Gujarat, Kerala, Madhya Pradesh, Rajasthan and West Bengal improved their growth rate in PCNSDP (per capita net state domestic product) during the post-reform period. In the first decade (1980-89) Gujarat, Haryana, Karnataka, Maharashtra, Orissa Punjab, Rajasthan and Tamil Nadu recorded growth rate higher than average growth in per capita NSDP. These results are further confirmed in the chart 2. Simultaneously, in the second decade (1990-99) Andhra Pradesh, Gujarat, Karnataka, Kerala, Maharashtra, Rajasthan, Tamil-Nadu, West-Bengal recorded growth rate higher than average growth in per capita NSDP. On the other hand states such as Bihar, Punjab, Assam, Haryana, Orissa, Uttar Pradesh, and Madhya Pradesh have recorded below average growth rates in PCNSDP (per capita net state domestic product). In the third decade (2000-04) along with Punjab (2.24 percent) and Tamil Nadu (2.23 percent) Karnataka (3.68 percent) also experienced below average growth rates (4.26 percent) in per capita NSDP while most of the states
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94 experienced increased average growth rates in per capita NSDP such as Orissa and Madhya-Pradesh which experienced a higher than average growth rate because in these backward states resources are unutilized. So there are more chances for achieving a higher growth rate than the already developed states. Maharashtra (1.01 percent) on the other hand experienced acceleration in NSDP but its population growth was very high and hence NSDP growth was not sufficient to overcome the population growth and hence its per capita NSDP was below average and experienced drastic reduction in the growth rate of per capita NSDP during 2004-05. On the other hand, Bihar, Assam and Uttar-Pradesh have recorded below average growth rates. (Refer Charts 3, 4 and 5). Though the average growth rate of the fifteen states increased, there was a marked deceleration in growth rates immediately after the reforms in six of the fifteen states taken up in the present study. In the next decade, however, the states picked up and the positive effects of the reforms came to be reflected in higher growth rates during the period 2000-04. Thus it can be concluded that Gujarat, Karnataka, Rajasthan, Kerala, Tamil-Nadu have risen ahead in terms of income growth, while the position of Andhra-Pradesh, West-Bengal, Kerala improved. Punjab and Haryana lagged a little behind. A large reduction was observed in the growth rate of Maharashtra and Tamil-Nadu especially in the third decade. Growth rate of Maharashtra increased in the early post-reform period but later on it detoriated. Coefficient of variation of growth rates increased from 34.9 percent in 1980-89 to 53.9 percent in 1990-99 and further to 65.0 percent in 2000-04 indicating a rising disparity in the growth rate of per capita NSDP (net state domestic product) among states which indicates that it does not follow Kuznet s curve.
95 4.6 Per Capita NSDP at 1999-2000 Prices Per capita estimates for a more recent period are available at constant prices, base year 1999-2000. Table 4.5 shows per capita NSDP for the states at 1999-2000 base years chosen for study. Table 4.6 State-wise Per capita NSDP at Factor Cost (at constant prices) 1999-2000 (In Rupees) States 1999-00 Andhra Pradesh 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 15427 16574 17213 17340 18819 19963 21728 23898 Assam 12282 12447 12529 13072 13675 13946 14419 14894 Bihar 5786 6554 5994 6658 6117 6772 6745 8233 Gujarat 18864 17227 18200 19509 22387 23346 26268 28335 Haryana 23222 24423 25638 26748 28805 30690 32980 36669 Karnataka 17502 17352 17402 18115 18236 19840 22322 23593 Kerala 19461 19809 20659 21944 23159 25122 27714 30476 Madhya Pradesh 12384 11150 11715 10880 11870 12032 12567 12881 Maharashtra 23011 21892 22258 23447 24859 26603 28683 30982 Orissa 10622 10208 10697 10500 11900 13311 13877 15760 Punjab 25631 25986 25992 25955 27075 27905 28487 30154 Rajasthan 13619 12840 13933 12054 15579 14908 15736 17480 Tamil Nadu 19432 20319 19748 19662 20707 22975 25558 28320 Uttar Pradesh West Bengal 9749 9721 9672 9806 10120 10421 10758 11334 15888 16244 17225 17568 18374 19367 20187 21773 India 15839 16133 16762 17075 18263 19297 20858 22580 Average 16192 15516.4 16591.6 16883.87 18112.1 18346.7 20535.2 22318.8 Standard Deviation Coefficient of Variation 5561.1 5799.7 5825.6 6178.2 8315.9 8315.9 7805.1 8515.7 Source: CSO website as on 31.07.10 34.34 37.37 35.11 36.5 45.32 45.32 38.0 38.1 In this table Kuznet s hypothesis is not met as the CV increased between 1990-00 to 2006-07.
96 On examining the table inter-state disparities become apparent as is evident from the wide range in per capita NSDP from Rs. 25631, the highest in Punjab to Rs. 5786, the lowest in Bihar in the year 1999-2000. In 2006-07 per capita NSDP ranges from Rs. 36669 in Haryana to Rs. 8233 in Bihar revealing four times disparity between the highest and lowest per capita NSDP for the year. Table 4.5 shows per capita NSDP for the states at 1999-2000 base years chosen for study. But results are almost the same as analyzed in per capita NSDP at 1993-94 prices. Per capita estimates for a more recent period are available at constant prices, base year 1999-2000. It is also observed from the table 4.5 that for the three years under review Punjab had highest per capita income while for the next four years Haryana s per capita NSDP was the highest followed by Maharashtra, Kerala, Gujarat and Tamil-Nadu. Bihar and Uttar-Pradesh remained at the bottom throughout the period. Out of the remaining states Karnataka emerged to be better state and consistently recorded greater than average per capita NSDP for the whole period followed by Andhra-Pradesh and West-Bengal which also recorded more than the average per capita NSDP from the year 2000-01 and can be included in the category of intermediate states. The average per capita NSDP of the selected states has increased from Rs. 16192 in 1999-2000 to Rs. 22318.8 in 2006-07. States such as Assam, Orissa, Bihar, Madhya-Pradesh, Rajasthan and Uttar-Pradesh can be said to form the poorer category of states. Thus, the level of per capita NSDP depicts the inter-state disparity as shown by the increasing coefficient of variation which increases from 34.3 percent in 1999-2000 to 38.1 percent in 2006-07. 4.7 Convergence and Divergence Tests The tests adopted to examine the process of convergence and divergences are sigma convergence and alpha convergence. The sigma convergence hypothesis
97 tests whether the inequalities have decreased or not in terms of the standard deviation of income. If the estimated beta coefficient is negative convergence is said to be taking place. On the other hand if the coefficient is positive, divergence occurs across the selected states. Similar to the sigma convergence, alpha convergence take place. If the estimated beta coefficient is negative convergence is said to be taking place. On the other hand if the beta coefficient is positive divergence takes place across the selected states. i) Sigma Convergence: The results show significant divergence in the levels of PCNSDP among the states. (1980-81 to 2004-05) Log SD (PCNSDP) = 3.19944 + 0.019084 t R 2 = (0.968092) (0.01074) (0.000722) F = 697.8263 (1980-81 to 1989-90) Log SD (PCNSDP) = 3.19292 + 0.01148 t R 2 = (0.92759) (0.018731) (0.00185) F = 102.4827 (1990-91 to 1999-2000) Log SD (PCNSDP) = 3.189429 + 0.024705 t R 2 = (0.957544) (0.021051) (0.001567) F = 180.4309 (2000-01 to 2004-05) Log SD (PCNSDP) = 3.353975 + 0.230019 t R 2 = (0.300035) (0.011319) (0.009982) F = 1.285907 The estimated beta coefficients are positive and significant in all the period. The beta coefficient has increased in value in the post reform period and R 2 value is high suggesting economic reforms have resulted in increased disparities. These estimates also reveal that the rate of divergence has increased after the introduction of economic reforms as the value of coefficient has increased from 0.01148 in the pre-reform period (1980-81 to 1989-90) to 0.230019 in the post reform period (2000-01 to 2004-05).
98 ii) Alpha Convergence: The alpha convergence values too showed an increasing tendency in the disparities. (1980-81 to 2004-05) CV of PCNSDP = 30.62 + 0.4326 t R 2 = 0.732 (0.810) (0.0545) F = 62.89 (1980-81 to 1989-90) CV of PCNSDP = 29.34 + 0.582612 t R 2 = 0.807327 (0.5436) (0.093896) F = 33.52118 (1990-91 to 1999-2000) CV of PCNSDP = 31.23697 + 1.94507 t R 2 = 0.6697 (0.49697) (0.123388) F = 16.22235 (2000-01 to 2004-05) CV of PCNSDP = 52.94 + 14.7339 t R 2 = 0.238639 (-0.62) (0.639375) F = 0.940313 The coefficient of variation of PCNSDP (per capita net state domestic product) significantly increased in the pre reform and post reform decade. Hence, the beta coefficients are positive in all the periods but not significant at five percent level of significance. The coefficient increases in value in the post reform period, as it increased from 0.582612 during pre-reform period (1980-81 to 1989-90) to 14.7339 in the second period of the post reform (2000-01 to 2004-05). Thus, we may conclude that there is no convergence but weak divergence. Thus, it may be concluded that regional disparity is common process in most of the developing countries and per capita income is the best single indicator for assessing the level of economic development or for measuring the level of disparity. NSDP does not reveal the correct disparity level among the states as it is high in the states which are larger in terms of area, or may have more resources such as Maharashtra, Uttar-Pradesh and West-Bengal than the states such as
99 Karnataka, Punjab and Gujarat which otherwise fare better in terms of growth and development. In terms of Per Capita NSDP Punjab, Maharashtra, Haryana and Gujarat followed by Tamil-Nadu have been the leading states throughout the period and Bihar, Orissa, Madhya-Pradesh and Uttar-Pradesh and Assam have been the bottom states. This disparity is shown by the increasing coefficient of variation especially after the initiation of economic reforms in the country. Similarly, these results are further confirmed in the ranking of states. By and large growth rate increased in almost all the states but immediately after the reforms there was a marked deceleration in growth rates in six of the fifteen states taken up in the study. But in next decade the states picked up and the positive effect of economic reforms came to be reflected in high growth rates during the period 2000-04.