Mumbai, December 2: When it comes to achieving the ambitious plan of $5 tn economy in 2024, Indian states play a crucial role in helping the government to achieve the same. As per one report, states can do this by undertaking various structural reforms and learn from each other.
The report by State Bank of India (SBI) had analysed how different states stack up in their relative ranks, along with some pre-decided indicators and juxtaposed the same on a paired basis based on their supposed causation. A composite indicator was constructed using a Principal Component Analysis (PCA) by using eight variables namely GSDP, population, fiscal deficit, tax revenue collected, national highway length, power availability, unemployment and infant mortality.
The research finding showed that Maharashtra, Uttar Pradesh, Tamil Nadu, Karnataka, Gujarat, Rajasthan, West Bengal, Madhya Pradesh, Andhra Pradesh and Telangana were more promising and account for around 16.8 per cent of the global GDP in Purchasing Power Parity (PPP), when compared with countries with similar size of population.
“We would strongly recommend that states should maintain policy continuity and such should be the political regime agnostic, as there has been regime changes in some of these states. For example, rather than going for short-term measures like farm loan waivers, which impacts the credit culture, measures should be taken to improve the agricultural productivity as in many states, agriculture is the mainstay,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.
Further the report also recommended that the government should speed up the much-awaited land and labour reforms for the states to grow to their full potential and said, “Although states have evolved their own amendments to the central act, the Centre should make the national act on land acquisition clear and transparent to avoid conflicts due to difference in interpretations.”