About the Book

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 Author

Arvind Panagariya, Professor of Economics and Indian Political Economy at Columbia University, recently joined the Government of India as Vice Chairman, NITI Aayog; M. Govinda Rao is a well-known scholar in public finance in India. He is a Member of the Fourteenth Finance Commission, Government of India.

Table of Contents:
Series Editors’ Note ix Preface xi Contributors xiii 1. Introduction: Understanding the Growth Miracles of Andhra Pradesh, Bihar, and Gujarat 1 Arvind Panagariya and M. Govinda Rao Chapter 1 References 17 PART I: Andhra Pradesh Mudit Kapoor and Rahul Ahluwalia 2. Andhra Pradesh: Setting the Stage 21 3. Growth and Economic Transformation 29 4. Poverty and Employment 59 5. Microfinance and Employment Guarantee Program in Rural Areas 77 6. Health and Education 88 7. Conclusions 102 Appendix 1: Implications of Bifurcation and Region-Wise Analysis of Andhra Pradesh 109 Part I References 117 PART II: Bihar Arnab Mukherji and Anjan Mukherji 8. Bihar’s Economy in Historical Perspective 123 9. What Went Wrong? 152 10. What Changed? 167 11. Governance and Reforms Matter 199 12. Conclusions 212 Part II References 217 ( viii ) Contents PART III: Gujarat Archana Dholakia and Ravindra Dholakia 13. Growth and Development in Gujarat: An Overview 227 14. Policy Reform in Economic Sectors 246 15. Urban Development 265 16. Fiscal Reforms and Performance 275 17. Elementary and Higher Education 285 18. Primary Healthcare and Medical Education 295 19. Governance, Efficiency, and Effectiveness 311 20. Lessons from the Gujarat Experience 320 Appendix 2: Sardar Sarovar Project (SSP) on the River Narmada 323 Appendix 3: The Earthquake and Its Impact on the Kutchh District 325 Part III References 327 21. Lessons from the States and Looking Ahead 333 Arvind Panagariya and M. Govinda Rao Index 341