Samuel Paul and Kala Sridhar of the Public Affairs Centre in Bangalore have completed a preliminary study on the North-South divide. Unlike earlier studies, it uses data to identify why some states developed faster than others. The study compares Tamil Nadu, Karnataka, Andhra Pradesh and Kerala with Uttar Pradesh, Bihar, Madhya Pradesh and Rajasthan — Ashish Bose’s Bimaru states. For a flavour of the analysis, I am quoting only the findings of comparisons between Tamil Nadu and UP.

In 1960-61, Tamil Nadu’s per capita income was Rs 5,053 versus Rs 3,338 for UP, a difference of 51 per cent. In the early 1980s, the gap narrowed to 39 per cent but in 2005-06, the gap widened to 128 per cent. The gap became pronounced from 1992-93. The study tries to find out why Tamil Nadu moved far ahead of UP by 2005.

Poverty ratios between the two states show that till about 1985, Tamil Nadu was the same or worse than UP. A 1998 report by Gaurav Datt and Martin Ravallion estimated nearly 70 per cent rural poverty in Tamil Nadu in 1960, versus only about 48 per cent in UP. Economic deprivation and inequality were much higher in Tamil Nadu but lessened rapidly. By 2005, Tamil Nadu’s per capita income exceeded UP’s by more than before, and its poverty ratio declined below UP’s.

Economists who have attempted explanations of differential economic development among countries have identified many factors. From focusing chiefly on the role of capital as an accelerator of economic growth, they had to factor in the demonstration by some developing countries that investment does not by itself achieve economic growth. Technical progress was recognized as enhancing productivity besides more familiar factors like the stability of the financial system, the availability of skilled labour and technology locally or through import, the use of substitutes such as diesel-generated power to beat power shortages, the use of railways when roads are poor or limited, the stock of different types of infrastructure, power and roads, and skilled labour. The emphasis on human development by the United Nations Development Programme has brought factors such as literacy, higher education, institutional quality and so on to explain growth.

Good governance in the state in which investment is made has no substitute. It adds efficiency to development of infrastructure, delivery of social services and provides superior law and order. In the same country, poor governance in one state is countered by investors picking other states that are better governed, or moving to them.

Factors that impact on economic performance are of two types: essential and those that enable growth to occur. The enabling factors include literacy, health, public investment, infrastructure and so on. The essential precondition of growth is good governance. It is that which creates the enabling environment. Investors assess both sets of factors in making strategic decisions.

The study uses comparative data on human resource capabilities, urbanization, infrastructure, development expenditures by governments and their efficiencies in resource use and governance. For human resource capabilities, it compares rates of literacy, infant mortality, proportion of graduates and technical manpower. Tamil Nadu’s literacy rate compared to UP’s has always been at a higher level when compared to UP. Infant mortality rates indicate the level of healthcare services, ignorance of good health practices, poor maternal health and poor family health.

Tamil Nadu’s infant mortality rate has always been lower than that of UP, though the disparity has been declining over the last 30 years. The proportion of graduates was higher in UP in 1971 and 2001. But the difference in quality cannot be quantified. Enrolment in technical courses, such as BE/B Sc, engineering, medicine, dentistry, nursing, pharmacy, ayurvedic and unani, as a proportion of the 15-plus age group is a proxy for the extent of technical manpower. Technical enrolment in Tamil Nadu is well above UP in recent years. Technical manpower has increased significantly in Tamil Nadu because of encouragement to new engineering and technical institutions. Tamil Nadu has always been ahead of UP in urbanization and, since 1991, it has been growing at a faster rate than UP. The study uses installed generation capacity as proxy for infrastructure. Tamil Nadu’s installed capacity was much higher in the 1960s than UP’s and, since the 1980s, it has grown faster. Tamil Nadu’s telephone penetration is higher than UP’s. There is little disparity between the two states on foodgrain yield per hectare. While Tamil Nadu had greater foodgrain yields than UP for many years, UP scores over Tamil Nadu in recent years.

The relative efficiency of governments in resource utilization was poor in UP. During 1985-90, Tamil Nadu spent Rs 22.389 crore for every additional kilometre of roads, while UP spent 10 times as much to create an additional kilometre of road. In the social sector in UP, primary education showed school infrastructure expanding rapidly but classroom activity levels unimproved. One out of four of the government schools was set up between 1996 and 2006, the proportion of schools with at least two pucca rooms rose from 26 per cent in 1996 to 84 per cent in 2006, free uniforms and textbooks were provided in 1996 to 10 per cent of students and to less than half of schools; this went up to nearly 99 per cent of schools in 2006.

The outcomes were that, in 2006, half the government schools had no teaching activity. Against Tamil Nadu’s percentage of children out of school at 4.9 in the age group 7-16, 3.6 in the age group 11-14 and 15.8 in the age group 15-16 (both boys and girls), UP’s was 8.9, 8.9 and 22.6 respectively in that year. The proportion of children not going to any government or private school, balwadi or anganwadi, was 57.7 per cent in UP whereas it was only 13.1 per cent for Tamil Nadu. These numbers suggest that UP’s efficiency in the deployment and utilization of resources was poorer than Tamil Nadu’s, reflecting the quality of governance. This may have led to slower economic growth in UP.

The study also measures governance by political stability, which is indicated by the tenure of chief ministers, law and order measured by the number of police firings, and functioning of the judiciary measured by the number of cases pending in the courts. The average tenure of chief ministers in Tamil Nadu and UP till 1967-68 was similar; since then it declined, but more steeply in UP. Police firings per million populations were significantly higher in UP. Pending cases are much fewer in Tamil Nadu. Uttar Pradesh has had higher tenures of chief ministers in the last decade but their capability is questionable, perhaps explaining poorer growth. Good governance is reflected in more effective government expenditures; efficiency in delivery of infrastructure and social services, better infrastructures, in all of which UP fares badly. All these explain the significant turnaround in Tamil Nadu after being at UP’s level.

The study pays little attention to agriculture. Possibly it will show little difference between the two states. All of India has seen poor and declining productivity in almost all crops. Central government expenditure on agriculture to gross domestic product has been declining. Tenures of government servants (not studied) are another indicator of better governance. The accountability of government servants is a crying need in administrative reform.

This is an important study and must be done for all states, and between districts in states. It will help the political and the government systems to plan the actions for a faster turnaround in growth among laggard states.