Sunday, January 3, 2010

Bihar, the star performer !

In India, regional disparities in growth and poverty alleviation are well known. In general, the more western and southern a state is, it is much better off. And the more eastern and northern the state is, it is in doldrums. So says conventional wisdom. Well, not any longer.

The economic growth of states over the last five years has just been published, and has been seized by the media and reported widely. So pardon me, if you have read this before. But its such a compelling story that it needs telling.

There were two states that grew by 11% , each year, over the last five years. One of them is no surprise, Gujarat. But the other will take your breath away. Its Bihar. Bihar was, jointly with Gujarat, the fastest growing state in India over the last five years.

Pause for a moment and reflect on this number. Eleven percent per annum GDP growth. It’s a stunning performance by any standard, anywhere in the world. Breathtaking. And Bihar is not the lone surprise. Uttaranchal & Orissa grew by 9% each. Jharkhand grew by 8.5%. All at, or above the national average of 8.5%. Even UP grew by 6.3%.

This has some important lessons and inferences. Firstly the myth that growth in India is not inclusive is rubbish. The so called poorer states have all grown handsomely. Growth in any form will trickle down to everybody. It’s the best remedy for poverty. Sure, there are large inequalities in each state and the misery amongst many in Bihar still continues. But any day, I would rather have growth with so called inequality, rather than no growth at all. If ever there was compelling evidence that economic growth must be pursued with religious fervour, this is it.

Secondly, there is definitely a link between good governance and growth. Narendra Modi, Nitish Kumar and Naveen Patnaik are some of the better governing state leaders, No wonder, their states occupy some of the top positions in the growth chart.

Thirdly you can do good governance and win elections. Modi and Patnaik have been reelected and Nitish Kumar carried the Lok Sabha elections on his own. It’s a fallacy that in a democracy you can’t win elections by good governance. The electorate may be gullible, but not downright stupid. People do recognize the value that growth brings and are willing to reward the leaders by reelecting them.

This is cause for celebration. Don’t throw mud at the statistics saying they are inaccurate – Probably they are in absolute terms, but trendwise, not far from the truth. Even though “India Shining” can lose elections, India is shining. And India is shining across the country – not only in Gurgaon or Bangalore. Its easy to moan about poverty and claim that all the growth is elitist, doesn’t benefit the poor and the usual claptrap. I repeat ad nauseum in this blog, the only way to alleviate poverty is through economic growth.

Tip your hat to Bihar, the economic tiger.