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Karnataka, Gujarat and TN, Biggest Gainers from 1990s Reforms: EAC – PM

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Gujarat, TN, Karnataka biggest gainers from 1990s reformsAccording to the working paper by the Economic Advisory Council to the Prime Minister(EAC-PM) titled Relative Economic Performance of Indian States: 1960-61 to 2023-24, there are significant economic transformations in various Indian states since the liberalization reforms of the 1990s.

  • The paper focuses exclusively on the relative performance of states, measured using two indicators :Share in India’s GDP and Relative per capita income.
  • This report analyzes the changes in the share of different states in India’s Gross Domestic Product (GDP) from Financial Year 1990-91 (FY91) to 2023-24 (FY24).
  • Karnataka, Gujarat, Delhi, Andhra Pradesh (AP), Telangana, and Haryana have made the largest gains in increasing their shares in the national GDP.
  • In contrast, West Bengal (WB), Uttar Pradesh (UP), Uttarakhand, Bihar, Punjab, and Assam’s shares in India’s overall GDP have gone down.

Economic Growth and GDP Share Changes:

i.Gujarat: Increased its share of national GDP from 6.4% in FY91 to 8.1% in 2023-24.

ii.Tamil Nadu: Experienced a recovery, with its share rising from 7.1% in FY91 to 8.9% in FY24, despite a decline from 8.7% in 1960-61.

iii.Karnataka: Grew its GDP share from 5.3% in FY91 to 8.2% in FY24, driven by its emergence as a technology hub.

Share of National GDP % Comparison in FY91 and FY24

StateGDP Share in %(FY91)GDP share in % (FY24)Change (%)
Karnataka5.38.2+2.9%
Tami Nadu(TN)7.18.9+1.8%
Gujarat6.48.1+1.7%
Maharashtra14.613.3-1.3%
Uttar Pradesh(UP)12.68.4-4.2%

Key Points:

i.Share of Karnataka in national GDP rose to 2.9% in FY24 while for UP and West Bengal (WB) it fell to 4.2% and 2.6% respectively.

ii.The South zone (including TN, Karnataka, Andhra Pradesh/AP, Telangana, and Kerala) increased its share of national GDP from 25.2% in 1960-61 (FY61) to 30.6% in FY24.

iii.In contrast, the East zone (including Bihar, WB, Jharkhand, and Odisha) saw a decrease from 21.2% in FY61 to 12.7% in FY24, highlighting a stark divergence in economic performance across regions.

iv.The Central zone (including UP and Madhya Pradesh/MP) decreased its share of national GDP from 20.7%  FY61 to 15.6% in FY24.

v.For North zone (including Delhi, Punjab, and Haryana) it was increased from 6.5% to 9.6%,  and for West Zone (Maharashtra and Gujarat) it was increased from 18.3% to 21.4% in FY24.

vi.Sikkim has achieved remarkable growth interms of per capita Income.

  • Sikkim’s per capita income surged from around 100 percent of the national average in 2000-01 to 320 % in 2023-24. Sikkim was followed by Goa(290.7%) and Delhi(250.8%).

Recent Related News:

The World Bank (WB) has released its report titled ‘World Development Report(WDR) 2024: The Middle Income Trap‘, highlighting the challenges faced by middle-income countries in achieving highincome status. As per the report, India would take nearly 75 years to reach one-quarter of the United States of America(USA) income per capita, while China would take more than 10 years, and Indonesia nearly 70 years.

About Economic Advisory Council to the Prime Minister(EAC-PM):
The EAC-PM is an independent body constituted to give advice on economic and related issues to the Government of India(GoI), specifically to the Prime Minister(PM).
Chairman – Dr. Bibek Debroy
Headquarters – New Delhi(Delhi)