Madhya Pradesh 2023: Comparing state's economic parameters under BJP, Cong

Business Standard analyses the state's progress in the key economic parameters under current govt and sees if it was any better than the previous five years of the Digvijaya Singh govt

Union Home Minister Amit Shah recently released the report card for the Madhya Pradesh government and claimed that the Bharatiya Janata Party (BJP) regime has achieved much in the state. The Congress, on the other hand, rapped the state government for increasing debt to an alarming level.

Amid these claims and allegations, let us analyse the state's progress in the key economic parameters and see if it was any better than the previous five years of the Digvijaya Singh government.

The BJP has been in power since December 2003, barring a year and a quarter when Kamal Nath from the Congress became the chief minister on December 17, 2018, and remained in office till March 23, 2020 (see pointers at the end of the story). So, the BJP completes around 18 years and nine months when the elections would be held in the state sometime around November-December. Of this, Shivraj Singh Chouhand would be the head of the state government for around 17 years and nine months.

First, let us look at the charges of the Congress that the state's debt has increased much during the BJP rule. Though the BJP government came to power in 2003, it came in December of that year, so it ruled the state only for four months in 2003-24. As such, the correct assessment could be done if we take 2004-05 for the BJP rule. At the end of 2004-05, the state debt stood at Rs 44,585.9 crore, which swelled to Rs 3.16 trillion in 2021-22.

However, this is not the correct way to assess government debt, as inflation is not adjusted. The correct way is to look at the debt-GSDP ratio.

Debt-GSDP ratio of the state was as high as 39.5 per cent during 2004-05 which was higher than any previous five years of the Digvijaya Singh-headed Congress government. The ratio rose to almost 40 per cent the following year. However, that was the peak of the BJP government so far. The government debt remained over 30 per cent of GSDP till 2008-09. After that, it never touched 30 per cent in actual figures, excluding estimates.

The debt constituted 27.1 per cent in 2021-22. It was projected to rise to 29.3 per cent in 2022-23 in the revised estimates. However, the ratio is projected to rise to 30.4 per cent in the current financial year. It would be after 14 years that the state would see its debt accounting for more than 30 per cent of its economic size. It had touched almost 30 per cent in the Covid-affected 2020-21, but stayed at 29.8 per cent then.

The freebies or social welfare programmes announced by the government may be raising the size of the government debt. For instance, the government had provisioned Rs 8,000 crore for the 'Mukhyamantri Ladli Behna Yojana', a new scheme for the welfare of women in the state. However, from October, Rs 1,200 would be given to women aged at least 23 years against Rs 1,000 at present.

A study of the fiscal parameters of the state by the Reserve Bank of India last year had included Madhya Pradesh in ten states which were fiscally vulnerable due to their high debt levels. However, the state was not part of the highly stressed states, which included Bihar, Kerala, Punjab, Rajasthan and West Bengal. The other four vulnerable states were-- Andhra Pradesh, Haryana, Jharkhand and Uttar Pradesh.

However, the debt-GSDP ratio was quite higher than the previous Digvijaya Singh government. It was over 30 per cent in each of the five years, peaking at 36.7 per cent in 1999-00. It even reached 37.8 per cent in 2003-04, eight months of which were under the Congress government.

Now, come to GSDP growth rates. Three of the five years of the Digivijay Singh government yielded higher growth rates than the national GDP growth rates. However, the two years -- 2000-01 and 2002-03 -- delivered contraction in GSDP growth rates when the national GDP growth rates were positive.

The BJP governments since then (excluding the years 2003-04) delivered higher GSDP growth rates in eight years than the national GDP growth rates. The growth rate at 7.1 per cent in 2022-23 was close to the national GDP growth rate of 7.2 per cent. The Kamal Nath government also yielded a higher growth rate in 2019-20.

The growth rates of GSDP under the BJP governments were less than those in the national GDP in seven years. In 2020-21, the contraction of GSDP at 4.2 per cent was less than that of the national GDP at 5.8 per cent.

The growth rate of the state economy was also higher at 11.4 per cent in 2003-04 than that in the national GDP at 8.4 per cent.

The state per capita income has always been less than the national average. However, the Digvijaya Singh government left it at around 65 per cent of national per capita income in 2002-03. If 2003-04 is also regarded as the Congress government's year, then the state per capita income that the BJP government received from the Congress regime was 68.5 per cent of the national average. This improved to 81.6 per cent during the latest year 2022-23 for which the data is available. The state's per capita income crossed Rs 100,000 three years after the national average did so in 2016-17. It was achieved during the Kamal Nath government.

Size of the state economy slipped below four per cent of the national economy during 2003-04 (most of which was under the Digvijaya Singh government). It was over four per cent in the previous five years. It never came to four per cent till 2015-16. After that, it never slipped below four per cent. In fact, it was 4.8 per cent during the last three years each-- 2020-21, 2021-22, 2022-23. The size of the state economy in proportion to the national GDP during the Digvijaya Singh government was highest at 4.5 per cent in 1999-00. Even the Kamal Nath government had it higher at 4.6 per cent during 2019-20.

The state's tax revenue was over seven per cent of the state economy during 1999-2000, 2000-01 and 2002-03. It was just 5.4 per cent in 2001-02 and 6.6 per cent in 2003-04.

This mostly remained higher than seven per cent during the BJP governments in the pre-goods and services tax (GST) period. However, it never came to 7 per cent in the post-GST period.

Periods under study:

• The Congress government under Digvijaya Singh: December 1998 to December 2003

BJP governments:

• Under Uma Bharti: December 2003 to August 2004
• Babulal Gaur: August 2004 to November 2005
• Shivraj Singh Chouhan: November, 2005 to December, 2018
• Congress government under Kamal Nath: December 2018 to March 2020
• BJP government under Shivraj Singh Chouhan: From March 2020 till present