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Sanjeev Kumar Patro

Bhubaneswar: Here is another shocker for Odisha. In the indices of per capita income, the State languishes in the bottom-ten states in the country. With an average per capita income of Rs 1.01 lakh, Odisha has been ranked at 10th from the bottom in the country. The State is ranked at 19th among the 28 states in India.

Such a home-truth has been to the fore by the 15th Finance Commission report that was recently tabled in the Parliament.

As per the report, the average per capita income of all the states were calculated taking into account the per capita income for the period of 2016-19, means three consecutive financial years of 2016-17, 2017-18 and 2018-19. The per capita income was computed by recording the total GSDP of the states for the period of three fiscal years and the population during the respective years.

A detailed glance at the document reveals that the bottom-10 states with poor per capita income are: Bihar, Uttar Pradesh, Jharkhand, Manipur, Assam, Meghalaya, Madhya Pradesh, West Bengal, Chhattisgarh and Odisha.

Though states like Goa and Sikkim have occupied the top-2 ranks in the indicator of per capita income in the country, the 15th FC had taken the per capita income of Haryana, which finished at number three in the indicator, for calculating the income distance of states to compute the inter-se share of each State in the devolution of central taxes and duties.

WHY HARYANA CHOSEN?

As per the 15th FC report, since Goa and Sikkim are smaller and outlier states, and in order to avoid statistical distortions, Haryana, which has the 3rd highest per capita income in the country was chosen to calculate the income distance of other states.

(Income distance means how far a state with poor per capita income from the statistically benchmarked state having the highest per capita income.)

IS ODISHA BETTER OFF THAN BIMARU STATES?

Since Odisha has been ranked higher than the neighbouring Chhattisgarh, Jharkhand, Bihar, MP and UP, is the State growing faster than the rest of BIMARU (Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh) states, except Rajasthan, and a non-BIMARU State like West Bengal?

The hint to the big puzzle has been dropped by the Finance Commission itself. The big revelation it has made is the majority of the bottom-10 per capita income states are the most populous in the country like – Bihar, UP and West Bengal.

However, the contrary fact to the fore is Odisha, Jharkhand and Chhattisgarh are not among the top-10 populous states in the country. Still, they had to occupy the bottom bench.

POPULATION – PER–CAPITA LINK

Explaining the relationship of population growth with per capita income, former XIMB professor Dr Niraj Kumar said,

“The growth rate of per capita income roughly equals to the difference between the growth rate of income (GSDP) and the growth rate of population. Suppose if a less developed State’s GDP grew by 10 per cent and the rate of growth of population is around 1 per cent, then the rate of growth of per capita income will be around 9 per cent only. So, the lower the growth rate of the population of a poor state, higher will be its per capita income.”

ODISHA VS OTHER POOR PERFORMERS

When the rate of population growth in Odisha during the period of 2016-19 had been around 0.4 per cent annually, the growth rate in neighbouring Chhattisgarh and Jharkhand had been around 1.2 -1.4 per cent. The rate of growth is a little higher in UP and Bihar.

In contrast, when the GSDP growth rate in case of Odisha had been around 13 per cent and 11 per cent, the respective growth rates in Jharkhand stood at around 14 per cent and 11 per cent. But Jharkhand slipped behind Odisha for the higher rate of growth of population. The scenario is more or less the same with the poor showing states like Chhattisgarh, Bihar, West Bengal and UP.

The big takeaway, therefore, is Odisha pulled ahead of other BIMARU states not by higher growth rate but by virtue of lower population rate of growth.

ODISHA VS HARYANA

When Odisha had posted a GSDP growth rate of around 13 per cent in 2017-18 and over 11.7 per cent in 2018-19, Haryana had posted a growth rate of around 14 per cent and 10 per cent, respectively.

Moreover, when Odisha’s population grew by around 0.4 per cent, the rate of growth in Haryana had been higher at around 1.4 per cent per year.

Because Haryana had a lower population than Odisha, the per capita income there had been far higher than the State. (See the image above).

As per experts in Nabakrushna Choudhry Institute of Development (NCID), since Odisha had a higher population than Haryana (almost twice), the State has to grow faster than Haryana to match with the latter’s per capita income.

The bottom line is despite the Naveen Patnaik-led government’s high sounding claims of Odisha achieving big in GSDP growth rate, the per capita income ranking mirrors the reality check of why Odisha is still a poor state in the country – almost at par with BIMARU states.

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