The Making of Miracles in Indian States : Andhra Pradesh, Bihar, and Gujarat Hardback

by M. Govinda (Director, Director, National Institute of Public Finance and Policy, New Delhi, and Rao

Edited by Arvind (Professor of Economics and Jagdish Bhagwati Professor of Indian Political Econom Panagariya

Part of the Studies in Indian Economic Policies series

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Growth miracles typically have been studied at the country level.

The Making of Miracles in Indian States breaks from that tradition and studies three growth miracles in India at the level of the state: Andhra Pradesh, Bihar, and Gujarat.

These are three of the largest and most diverse states in India. Andhra Pradesh is situated in the south of India, Bihar in the east, and Gujarat in the west.

Bihar is the poorest among all states in India, Gujarat the third richest among the largest eighteen states, and Andhra Pradesh in the middle. Andhra Pradesh and Gujarat have long coastal lines while Bihar is landlocked.

Yet, all of these states have grown at rates exceeding 8% for an entire decade in the 21st century. Despite many differences in the initial conditions, several common threads tie the high-growth experiences of the three states.

First, accelerated growth has permitted acceleration in the growth of development expenditures in all three states, which has helped improve connectivity to markets.

Alongside this growth, poverty has seen accelerated decline.

Second, the composition of growth matters. Growth in high-value commodities such as fruits and vegetables, commercial crops, dairy, and animal husbandry in Andhra Pradesh and Gujarat has led to accelerated reduction in rural poverty.

However, the failure of labor-intensive industry has stunted the migration of workers out of agriculture into industry.

Third, the quality of leadership that brings improved governance with it is central to improved outcomes in the states.

Visionary leaders---Chandrababu Naidu in Andhra Pradesh, Nitish Kumar in Bihar, and Narendra Modi in Gujarat---played critical roles in the making of all three miracles.

Fourth, the three studies also bring out the importance of pro-market reforms and the adoption of technology in development.

Finally, the studies show that good economics is also good politics: voters reward the chief ministers who bring about significant improvement to the people's lives.