Time to split UP, Bihar and MP?

While there are numerous discussions around Indian economy and our society in general (religion in particular) but in my view, the biggest challenges are in regional variations in economic performance.

Let me illustrate that with Data

Let us look at the top 5 most affluent provinces in China

Together about 190 million people live there with an average per capita GDP of 17.5K USD

Let us look at the Bottom 5 provinces in China (On per cap)

Together about 197 million people live there with an average per capita GDP of 5.7K USD

The gap between the two groups is about 3 times with almost the same population

Now, Let us look at the top 5 most affluent States in India

Together about 147 million people live there with an average per capita GDP of Rs 2.05 lakhs

Let us look at the Bottom 5 States in India (On per cap)

Together about 441 million people live there with an average per capita GDP of Rs 0.58 lakhs

The multiple is 3.5 times

So not only is the multiple far worse, the population gap is massive unlike China.

Another way to look at it is, just 14% of the population live in the 5 poorest provinces of China, it is 36% in India and getting worse as population growth in the bottom 5 states is almost double that of the most affluent states.

Only one thing unites the poorest Indian States and the poorest Chinese Provinces - A Coastline. Except for one Chinese province Guanxi, the poorest States and Provinces in India and China are away from the Coast.

And here is more bad news

Over the first 4 years of the Modi Government, the top 5 States grew at least 1.2% faster every year on per capita than the poorest States. This is on the back of

• 14th FC recommendations which pushed a higher share of central taxes to poor States
• Most Central programmes that benefitted these poor States the most (Oil Savings)
• GST which improved the revenues of many of these States
• Better education opportunities owing to more national level tests

If all this effort, if the results are not forthcoming, perhaps one must consider other methods.

One factor that distinguishes the faster growing States and the slower ones is population

Top 5 States; Average Population: 29 million

Bot 5 States; Average Population: 88 million

Madhya Pradesh has been one exception but that too has began to unravel on account of over reliance on agriculture.

If India has to grow at a 8 to 10% level, these 5 States will have to grow significantly faster than they are growing now. All the special focus like FC, Central programmes etc hasn't helped, perhaps splitting UP, Bihar and MP into 7 to 10 States may be worth the risk.

Note: The poorest province in China has a per capita which is almost the same as Delhi, India's second most affluent state after Goa