Bihar, Odisha, Chhattisgarh and Madhya Pradesh, once derisively called Bimaru states, have suddenly started growing much faster than the national average. They have followed widely divergent paths to success, which need elucidation.
In 2011-12, national GDP growth was 6.21%. But Bihar (13.26%), Madhya Pradesh (11.81%), Jharkhand (8.92%) and even Uttar Pradesh (6.86%) fared better than the national average. Odisha (4.92%) lagged behind , but this was a one-time departure from an average of 8% in the last decade. Provisional data for 2012-13 are no more than projections, but they once again show most backward states growing faster than the national average of 5%.
Graft Out, Growth In
Odisha chief minister Naveen Patnaik has won three successive elections. In 2000, Odisha had the biggest fiscal deficit and debt:GDP ratio among all states. Today, it has become a revenue-surplus state and, amazingly , so have almost all the once-backward states. Fast state-level growth has generated a revenue bonanza, over and above which fast national growth has hugely increased the states’ share of central revenue (poor states benefit disproportionately from such transfers).
Odisha always had minerals, but was held back by the licence-permit raj and high corruption. Politicians sought to get re-elected through patronage networks and wooing vote banks, not economic development.
Patnaik transformed this by weeding out corruption and focusing on development. He has sacked more than 20 ministers for corruption in the last decade, and quashed revolts from those sacked . Despite many big projects – Posco’s steel plant and Vedanta’s aluminium smelter – getting hamstrung by tribal agitations, Odisha has averaged 8% growth for a decade.
End for Gangsters
In Bihar, Nitish Kumar focused first on restoring public order and ending endemic gangsterism that had flourished under his predecessor . Through imaginative use of the Arms Act, he quickly tried and jailed over 50,000 gangsters. This hugely encouraged economic activity earlier held back by fear of gangsters.
Kumar also built roads and bridges that were in terrible shape. No theory of Marx or the World Bank said that double-digit growth could be generated in a state with hardly any electricity, simply by improving law and order and building roads. Kumar has driven home the key importance of these.
He has followed up by focusing on primary education and primary health. The state historically was at the very bottom of most social indicators . But in the decade 2001-11 , its literacy rate improved 16.8 percentage points and female literacy improved a whopping 20 points, perhaps the best anywhere in the world. Infant mortality in Bihar used to be among the highest in India, but by 2012, had fallen enough to equal the national average of 44 per 1,000.
In Madhya Pradesh, Shivraj Singh Chouhan initially struggled to accelerate economic growth, but hit double digits last year and again this year. Arguably, his biggest success has been in agriculture. The Food Corporation of India was reluctant to procure paddy and wheat in poor states without a history of food surpluses . Hence, prices there often slumped below the government’s minimum price, discouraging farm investment and production.
Chouhan decided to build the rural infrastructure required for a local wheat procurement effort. The result: he procured a spectacular 7.5 million tonnes of wheat in 2012, as much as Punjab used to in early Green Revolution years. It’s another matter that he has failed to create storage facilities, so much grain will rot. He has shown that poor states must stop blaming the central government for neglect and, instead, invest massively themselves in the infrastructural support – rural roads, organised mandis and procurement agencies – needed for a major procurement effort.
Growth Despite Maoists
Chhattisgarh has learned from him, and is now procuring paddy in a big way. Ironically, rice from Odisha is finding its way into Chhattisgarh for procurement, a rebuke to Naveen Patnaik for neglecting this area. Even more impressive, chief minister Raman Singh has shown it is possible to generate double digit GDP growth in a state with the worst Maoist terrorism.
His Salwa Judum, an anti-Maoist militia , has been widely denounced for civil rights violations, but he has definitely curbed Maoism. He has sparked a huge expansion in steel, aluminium and power production , making this backward state an industrial giant. Over and above that, he has greatly improved public services: his public distribution system and public health system have been widely praised even by those that condemn Salwa Judum. In sum, these four once-backward states have taken four very different paths to fast growth and prosperity.
The success of each state holds lessons for others, and there is much scope for mutual learning. All these states have strong chief ministers who have empowered bureaucrats to implement schemes boldly, to experiment with new ideas and push for better, more honest implementation . This model of a strong chief minister and strong bureaucracy has also worked well in Gujarat and Tamil Nadu. Uttar Pradesh and Rajasthan need to go the same way.