India Ratings: Smaller states, not the solution

Creation of smaller states, not the solution says credible India Ratings recent research report. Over the past, there have been few divisions in the states and smaller ones were formed. The most recent state to get divided is Andhra Pradesh. But as per the reports, it was found that creating smaller states was not a cure for improving the economic performance, social indicators and other infrastructure and this was proved by the states Jharkhand and Chhattisgarh.

Although a policy framework in necessary before division, the states are being divided before even calculating their strengths and weaknesses. It is important that an elaborative report is prepared before dividing the states instead of first announcing the division and then, think of the solutions for the problem, said India Ratings economist Sunil Kumar Sinha.

Coming to smaller states, only 11 states has a better growth than the national GDP, which was only 8% between the financial years 2006-2013. Of these 11, only five states – Uttarakhand, Kerala, Haryana, Goa and Himachal Pradesh were small. However, the average growth rate of Chhattisgarh (7.7%) and Jharkhand (7.7%) is lesser than that of the parent states MP (8.4%) and Bihar (9.9%), respectively.

Newly formed states, although, have developed in the fields of social indication, even the parent state has managed to do so and to add, the parent states have shown greater growth in the field of infrastructure. However, both the parent state and the child states highly depend on the central government. Hence, the report concludes that creation of smaller states was not a panacea for improving economic performance.