South gained most from liberalization, says PM-EAC Report

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PM-EAC Report reveals southern states gained from 1991 liberalization

By Raisina Correspondent

New Delhi, September 17: The southern states made most of the gains from the economic liberalization. A report by the PM’s Economic Advisory Council (PM-EAC) said that the southern states sped past the national average in per capital income as well as overall economic growth.

“Southern states have performed strongly in terms of per capita income since the 1990s. They had per capita incomes below the national average until the 1990s but grew much faster after liberalization,” said the PM-EAC Report – Relative Economic Performance of Indian States: 196061 to 2023-24.

The report said that “Telangana now has a per capita income 94 per cent higher than the national average”. The report stated that the industrialization in Tamil Nadu began steadily rising after 1991.

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The report made a comprehensive comparison between Punjab and Haryana. It noted that Haryana overtook Punjab in economic growth as well as per capital income rise.

The PM-EAC report asked if Punjab’s focus on agriculture contributed to a form of ‘Dutch disease’, hindering its transition to industrialization?

“Among the northern states, Delhi and Haryana have performed notably well, while Punjab’s economy has deteriorated after 1991. Despite its small size, Delhi saw its share of India’s GDP increase from 1.4 per cent to 3.6 per cent during this period,” added the PM-EAC in its report.

It stated that “Punjab and Haryana, which were once part of the same state, have experienced diverging economic trajectories. Punjab’s GDP share grew during the 1960s, mainly due to the Green Revolution, but then plateaued at around 4.3 per cent until 1990-91”.

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“It (Punjab economy) began to decline thereafter, finally reaching 2.4 per cent in 2023-24. Similar trends were seen in terms of relative per capita income,” added the report.

Punjab’s per capita income peaked at 169 per cent of national average in 1970-71and has since declined to 106.7 per cent of national average, even lower than the 119.6 per cent in 1960-61.

“Meanwhile, Haryana, which initially lagged behind Punjab on both accounts, continued to show robust performance. Haryana’s share of India’s GDP now exceeds that of Punjab, and its relative per capita income has reached 176.8 per cent, compared to Punjab’s 106.7 per cent in 2023-24,” added the PM-EAC Report.

The PM-EAC report also mentioned that Odisha witnessed a turnaround after the reforms unveiled in 1991 by then prime minister PV Narsimha Rao. “Odisha which was also seeing a consistent decline in terms of relative per capita income from 1960s to 1990-91 (70.9 per cent to 54.3 per cent), has seen a significant turnaround since then. Its relative per capita income increased from 54.3 per cent in 1990- 91 to 88.5 per cent in 2023-24,” added the report.

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It also stated that “West Bengal had the third-highest per capita income in 1960-61 but has been continuously declining; now lower than the national average and Odisha”. The PM-EAC report noted that “Assam has made a significant recovery in recent years”.