Latest book: "The Making of Miracles in Indian States"

Tue, 2015-06-30
  • 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,
  • confrims the importance of effective leadership in determining growth outcomes,
  • demonstrates that history matters when it comes to the choice of economic policies.

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.

About the Authors

Edited by Arvind Panagariya, Vice Chairman of Niti Aayog of India and 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

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.




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