India's future hinges on the Gangetic plain

Sustaining the growth momentum seen in FY23 in the three states along the country's holiest river is key to realising Viksit Bharat@ 2047

Whether India, that is Bharat, becomes a developed country by 2047 depends not only on what happens in Bengaluru, Chennai, Mumbai, and Hyderabad, its most advanced cities, or in Gujarat or Delhi — though these engines are crucial to pull India forward. Equally important will be whether the bogies at the back of the train, Uttar Pradesh and Bihar, India’s poorest states, and slow-growing West Bengal, together constituting a third of India’s population (460 million) remain a drag or transform into a back engine propelling India’s economy forward. The future of India, ironically, lies very much in the plains formed by its holiest river, the Ganges, where great empires and centres of learning once thrived, but now lag the rest of the country.

Bihar’s average income is less than a third (32 per cent) of the country’s average income, whereas UP’s is just under half (49 per cent). Both states have been on a tear in FY23, with their gross domestic product (GDP) growth much higher than the national average — 10.7 per cent in the case of Bihar and 8.4 per cent for UP. But in the preceding decade from 2012 to 2022 and before, their growth rates were below the national average.

Instead of converging, they were falling further behind. West Bengal, the state with the biggest potential but the poorest performance, grew only at 3.9 per cent over the decade from FY12-22. However, its growth perked up in FY23, reaching 8.6 per cent. In contrast, other poorer states like Madhya Pradesh, Odisha, and Assam have grown faster than the national average from 2012-2022 and continued that rapid pace in FY23. Better governance, good programmes, and improved infrastructure have yielded better results in these states.

The road to a developed India clearly passes through the Gangetic basin — UP, Bihar, and West Bengal. If these states can consistently and sustainably maintain their FY23 performance, India will be on its way to becoming an advanced country. In both UP and Bihar, governments have promised better governance and infrastructure but the next five years will show whether these have translated into consistently better economic performance.

In UP, the goal is to make it a $1 trillion economy when India’s GDP reaches $5 trillion. Achieving this would entail more than tripling its economy in the next three years — a challenging yet commendable target to strive for by 2030. Both Bihar and UP would need to increase their average annual GDP growth rate from 5-5.5 per cent seen in 2012-22 to 8-8.5 per cent over the next 25 years.

As Punjab and Haryana eventually shift away from cereals to higher-value crops, UP and Bihar could benefit from a second Green Revolution, much like MP has done. Better river transport through the Ganges, increased investment in tourism — highlighting the rich historical heritage of the Gangetic Plain — will also be a huge employment generator for both Bihar and UP. If the Ganges became India’s equivalent of the Rhine or Danube, Europe’s major rivers, these states would not only be better connected to the world, but it would also rejuvenate Kolkata and help revive the city’s fortunes.

One factor in their favour would be their demographic dividend. Both states will experience a continuous increase in their share of the working-age population for another decade or so, while richer states — especially in the South — will see that share declining, as their birth rates have fallen precipitously to levels only seen in advanced economies of Europe. Given better prospects elsewhere, some will migrate from UP and Bihar, which send the largest migrants to Maharashtra, Delhi, Punjab and to the South. Nevertheless, a substantial number must find employment within their own states and outside agriculture, as inter-state migration is quite low in India. Therefore, a focus on education and skilling remains critical to their future in addition to control over crime and infrastructure improvements. Within infrastructure, a focus on expressways is important but rural roads and rural electrification must also be prioritised. Information technology-based services also offer a pathway to higher incomes for these landlocked states.

Crucially, West Bengal needs to reverse its decline. As late as 1960, its per capita income was higher than that of Maharashtra but has now fallen behind even Odisha and Chhattisgarh. Its thriving industry and commerce were allowed to decline.  It was also an intellectual centre of India for a long time and a source of Bengali pride, but even there, it has been bypassed by others. Successive governments have followed anti-growth policies that have driven investment away from West Bengal. Changing the perception of West Bengal as a business-friendly state will take effort and consistent policies. Its partitioned part, which is now Bangladesh — also the larger part of the Gangetic delta, has shown how to do that. It prospered through textile manufacturing and export and human development with higher life expectancy and literacy than West Bengal.

Just as Haryana and Himachal have done well after Punjab was split, the solution also lies in considering bifurcating UP and Bihar into several smaller states to give them better governance. This is not easy but an option that should be given consideration after the next census, which will surely show that UP and Bihar’s population share has risen even higher. This may become necessary to avoid the perception that UP and Bihar dominate the country’s political arithmetic even more.

What happens in UP, Bihar and West Bengal, the three Gangetic states, will determine very much whether India will become an advanced economy or simply be stuck in a middle-income trap, with large regional disparities and resulting social and political tensions tearing away at its institutions. The future of India depends on what happens along its holiest river — the Ganges.

The writer is distinguished visiting scholar, George Washington University and co-author of Unshackling India (Harper-Collins India), declared Best New Book in Economics 2022 by the Financial Times