The Making of Miracles in Indian States

Andhra Pradesh, Bihar, and Gujarat

Edited by Arvind Panagariya and M. Govinda Rao

Studies in Indian Economic Policies

Studies three Indian states at very different levels of development that have all shown miracle levels of growth in the 21st century.
Shows that good economics is also good politics: good economic performance leads to electoral victories
Confirms the importance of effective leadership in determining growth outcomes
Demonstrates that history matters when it comes to the choice of economic policies

The Making of Miracles in Indian States

Andhra Pradesh, Bihar, and Gujarat

Edited by Arvind Panagariya and M. Govinda Rao

Studies in Indian Economic Policies

Description

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.

The Making of Miracles in Indian States

Andhra Pradesh, Bihar, and Gujarat

Edited by Arvind Panagariya and M. Govinda Rao

Studies in Indian Economic Policies

1. Introduction: Understanding the growth Miracles of Andhra Pradesh, Bihar, and Gujarat
Arvind Panagariya and M. Govinda Rao
Chapter 1 References
PART I: ANDHRA PRADESH
Mudit Kapoor and Rahul Ahluwalia
2. Andhra Pradesh: Setting the Stage
3. Growth and Economic Transformation
4. Poverty and Employment
5. Microfinance and Employment Guarantee Program in Rural Areas
6. Health and Education
7. Conclusions
Appendix 1: Implications of Bifurcation and Region-Wise Analysis of Andhra Pradesh
Part I References
PART II: BIHAR
Arnab Mukherji and Anjan Mukherji
8. Bihar's Economy in Historical Perspective
9. What Went Wrong?
10. What Changed?
11. Governance and Reforms Matter
12. Conclusions
Part II References
PART III: GUJARAT
Archana Dholakia and Ravindra Dholakia
13. Growth and Development in Gujarat: An Overview
14. Policy Reform in Economic Sectors
15. Urban Development
16. Fiscal reforms and Performance
17. Elementary and Higher Education
18. Health
19. Governance, Efficiency, and Effectiveness
20. Lessons from the Gujarat Experience
Appendix 2: Sardar Sarovar Project (SSP) on the River Narmada
Appendix 3: The Earthquake and Its Impact on the Kutchh District
Part III References
21. Lessons from the States and Looking Ahead
Arvind Panagariya and M. Govinda Rao

The Making of Miracles in Indian States

Andhra Pradesh, Bihar, and Gujarat

Edited by Arvind Panagariya and M. Govinda Rao

Studies in Indian Economic Policies

Author Information

Edited by Arvind Panagariya, Professor of Economics and Jagdish Bhagwati Professor of Indian Political Economy,, Columbia University, and M. Govinda Rao, Director, National Institute of Public Finance and Policy, New Delhi, and Member of the Fourteenth Finance Commission of the Government of India

Arvind Panagariya is a Professor of Economics and Indian Political Economy at Columbia University, Non-resident Senior Fellow at the Brookings Institution, and a former Chief Economist of the Asian Development Bank. Panagariya has written prolifically on global trade policy issues and economic reforms in India. The author of a dozen books, he has also published technical papers in many leading journals and other publications. Professor Panagariya writes an influential monthly column in the Times of India and has been honored with the Padma Bhushan by India.

Dr. M. Govinda Rao is a well known scholar in public finance in India. Presently, he is a Member of the Fourteenth Finance Commission, Government of India. His past positions include Director of the National Institute of Public Finance and Policy in New Delhi and Director of the Institute for Social and Economic Change in Bangalore. Dr. Rao was also a Member of Economic Advisory Council to the Prime Minister of India. He has chaired and was a member of several committees. He has written extensive publications in referred journals in addition to his 14 books and monographs.

Contributors:

Rahul Ahluwalia, University of British Columbia, Vancouver.
Archana Dholakia, Gujarat Institute of Development Research, Ahmedabad, Gujarat
Ravindra Dholakia, Indian Institute of Management, Ahmedabad, Gujarat.
Mudit Kapoor, Indian School of Business, Hyderabad, Andhra Pradesh.
Arnab Mukherji, Indian Institute of Management, Bangalore, Karnataka.
Anjan Mukherji, National Institute of Public Finance and Policy, New Delhi.
Arvind Panagariya, Columbia University, New York, New York.
M. Govinda Rao, Member, Fourteenth Finance Commission, New Delhi.

The Making of Miracles in Indian States

Andhra Pradesh, Bihar, and Gujarat

Edited by Arvind Panagariya and M. Govinda Rao

Studies in Indian Economic Policies

Reviews and Awards

"Two of India's leading economists have brought together top-notch experts-some senior scholars, others younger- to offer sophisticated, in-depth, and insightful studies of the relationship between public policy and developmental performance with respect to the economy and social sectors in a poor state (Bihar), a rich state (Gujarat), and a middle-level state (Andhra Pradesh). The central message of the volume is that poor and middle-level states are not condemned to underdevelopment; rather, there is abundant hope for substantial economic and social advance in India's various states, given-and it is fundamental-a leadership at the helm with vision and decisive administrative ability." - Baldev Raj Nayar, Emeritus Professor of Political Science, McGill University