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View: Economic growth not just Centre’s problem, time for CMs to take control

By Subodh Mathur

Everyone now knows that India’s GDP growth rate has slowed down. Even the chief ministers know it. But, they do nothing about it. They seem to think that economic growth is the Union government’s problem, not theirs. Not so – they are also responsible for economic growth.

Chief ministers have full control over the Constitution’s State List areas, and joint control over the Concurrent List areas. Legalities aside, chief ministers know the ground realities much better than the Union government. So, the Indian economy will grow faster if all chief ministers create state-specific growthoriented policies and administrative procedures. Sadly, most chief ministers don’t seem to care to do this.

How do we break this stalemate? It’s impractical to try to motivate all chief ministers at once. It seems better to focus on selected chief ministers who can quickly help a large number of Indians.

I looked at India’s most populous states to select these chief ministers. Growth here would surely boost India.UP and Bihar are two populous states. Their low per capita incomes are a major drag on India. However, this failure also indicates that there is a significant potential for quick improvements – if there is political will.

Maharashtra, Tamil Nadu, Karnataka, Gujarat, and Andhra Pradesh are five more populous states. They have a good record of economic growth, which suggests that they can do even better.

Call these seven as the Weighty 7 (W7) states. Together, they account for about 55% of India’s GDP and India’s population. The W7 chief ministers can quickly lift Indian’s economy by reducing the barriers that significantly constrain economic growth in their states.

First, improve power discoms, particularly in UP and Bihar. Their poorly rated power discoms are holding back economic growth. Improving discoms requires political will. The chief ministers have to allow competent managers, readily available in India, to run the discoms professionally. And work with the Union government, which is looking to improve discoms with various programmes.

Even the discoms in the other five W7 states have room for improvement. For example, in top-rated Gujarat, discoms’ total power loss is around 15%, much above the single digit loss in China.

Second, support and facilitate micro, small, and medium enterprises (MSMEs). They can increase incomes and jobs quickly. The Union government is focussed on the World Bank’s Ease of Doing Business Index. However, this index, based on large firms in major cities, is not relevant for MSMEs. What we need is a change in the attitude of state government officials from indifference, harassment, and corruption to helping MSMEs. And show them how to take advantage of government schemes, such as the Union government’s MUDRA.

Further, the chief ministers should motivate local management and technical educational institutions and their senior students to get involved in assisting MSMEs.

Third, the W7 chief ministers should do their best to reduce traffic congestion quickly. Congestion is no longer a minor nuisance. It wastes time and energy that could be used productively. For example, Bengaluru traffic is a considerable constraint on productivity. Of course, traffic congestion is a worldwide phenomenon, but every city is trying to do something about it. Any reduction in congestion would also reduce air pollution, which would also increase productivity.

Fourth, begin to take charge of your rural areas, instead of continuing to let the Union government take the lead in agriculture and other rural schemes. The W7 states should create their own programmes, tailored to local conditions with the involvement of district and even panchayat officers and knowledgeable people. A priori, these programmes would have a higher chance of working well than Union government schemes.

Groundwater depletion is a ticking time bomb in rural areas. Groundwater is a state subject, but the states have again let the Union government take the lead. It’s time for the chief ministers to take charge but collaborate with the Union government.

Young tech savvy Indians are now creating agritech and fintech apps aimed at villagers. These apps have the potential to introduce modern production ways and financial instruments that will increase rural production and incomes, without using government funds. The chief ministers should pro-actively facilitate them.

Overall, don’t let the rural economy sink so much that farmers need loan waivers. Instead, look for ways to invest money productively upfront so that there is no need for waivers.

Beyond the quick gains, the chief ministers should select 5-7 medium-sized district headquarters in different parts of the state for targeted development. This would reduce the future population pressures on the bigger cities, and even increase productivity there. And, it would help people in all parts of the state.

Will the W7 chief ministers do this on their own? Probably not, because voters have not pressed them to deliver overall economic growth for all – not just for particular voting blocs. Nor has any prime minister said, “I cannot do it all. I want chief ministers to play their role in promoting India’s economic growth.”

How can we begin to hold chief ministers as accountable for India’s progress as the prime minister? To start, use social media and grassroots organisations to spread this message. In parallel, interested thinktanks and activists should prepare and publicise workable plans that the W7 chief ministers could actually implement. Then we can ask them why they are sleeping on the job.

The writer is Adjunct Professor, Johns Hopkins School of Advanced International Studies

Source: Economic Times