Why South Indian states are more developed, ahead in per capita income, fiscal health

The five South Indian states of Tamil Nadu, Andhra Pradesh, Telangana, Kerala, and Karnataka have emerged as the strongest economies in the country, according to the recently released data analysis of the per capita income, state debt, tax revenue, interest payment ratio, and fiscal deficit

The data analysis from the media networks reveals that these five southern Indian states are among the major contributors to the nation’s economic growth, accounting for over 30 per cent share of India’s Gross Domestic Product (GDP). The data available from the Reserve Bank of India (RBI), and economic surveys of these states shows that in FY23 Tamil Nadu, with a GSDP of Rs 24.8 lakh crore at current prices, is the biggest economy in south India. Karnataka (Rs 22.4 lakh crore), Telangana (Rs 13.3 lakh crore), Andhra Pradesh (Rs 13.2 lakh crore) and Kerala (Rs 10 lakh crore) Gross State Domestic Product (GSDP) are the other five major economies in south India.

A look at the per capita income

Telangana recorded the highest per capita income of Rs 2,75,443 in FY22. Karnataka, with Rs 2,65,623, is in the second spot. It is followed by Tamil Nadu (Rs 2,41,131) and Kerala (Rs 2,30,601). Andhra Pradesh (Rs 2,07,771) has the lowest per capita income among the five major south Indian states. However, all these states have higher per capita income than the national average of Rs 1,50,007.

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The debt ratio indicates the capability of the southern states to further boost their economies. The debt to GSDP ratio is a major indicator for analysing the financial health of the economy where a lower debt-to-GDP ratio indicates the stronger financial condition of that state. Among the five major south Indian states, Telangana has the lowest debt to GSDP ratio of 25.3 per cent, followed by Karnataka (27.5 per cent), Tamil Nadu (27.7 per cent), Andhra Pradesh (32.8 per cent), and Kerala with (37.2 per cent).

Welfare distribution policies

As of 2023 though, Andhra Pradesh has less GDP because of the division of the United Andhra Pradesh leaving the well-developed Hyderabad capital to Telangana. Within Hyderabad, the Andhra capital share of investment is far higher than original Telangana investors’ capital. Andhra Pradesh will certainly catch up and advance given the present education and economic policies with a strong welfarism that the present government has put in place. It is a question of time.

The distribution of state resources for the welfare of productive masses does not weaken the state’s economy. In fact, it strengthens it. The state’s welfare distribution policies channel money into both rural and urban markets, thereby improving the purchasing power of the people in the state.

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However, what is more important is this: why do these South Indian states perform better than Gujarat, which has a GSDP of Rs 25.62 lakh crore, and West Bengal, which has a GSDP of Rs 17.19 lakh crore?  One reason could be the right-wing Hindutva model of development that the Bharatiya Janata Party (BJP) presented as the best model of development in the 2014 General Elections has no well-packaged welfare distribution.

The second reason could be the fact that West Bengal has been ruled by the Communist bhadralok for over 34 years and, subsequently, by liberal bhadralok for about 15 years now and both of them have no good welfare system in place. In both cases, the distribution of wealth among the agrarian productive masses is far less than that in the South Indian states.

 The curious case of Gujarat and Maharashtra

Why are the Southern states performing better than Maharashtra, which has the most industrial capital city, Mumbai? Maharashtra has a GDP of Rs 35.27 lakh crore, and its per capita income is Rs 2.42 lakh. Gujarat and Maharashtra are home to some of the wealthiest capitalists in the country and are listed among the world’s richest. Hundreds of top industrialists live in Western India, so their per capita income should have been much higher than that of the South Indian states. Though Gujarat per capita GDP is ₹281,804 the wealth in that state is more concentrated in the hands of industrialists and traders. There is no Tamil Nadu or Andhra Pradesh kind of robust welfare system in Gujarat.

These two states are under the grip of right-wing ideological forces, even though Mahatma Jyotirao Govindrao Phule and Bhimrao Ambedkar were born in that region. There is no visible educational welfarism in those states. The emergence of the middle-class from the Shudra/Dalit/Adivasi communities with good English medium education is not higher in those states compared to the Southern states. The Southern states are much better in generating a middle class from Dalit/OBC/Adivasis.

Stronger welfare initiatives in the South

The education and competing welfare initiatives in the South Indian states are much stronger compared to the Northern and Western states. In Tamil Nadu, due to the presence of two Dravidian regional parties, there has been a long-standing tradition of competing welfare policies. This has resulted in well-funded school education, a well-cared-for agricultural sector, and a robust healthcare system. Since 1967, Tamil Nadu has never allowed the national parties to come to power, which has allowed the state to maintain its focus on regional issues and the needs of its people.

In the united Andhra Pradesh and now in the two separate states of Telangana and Andhra Pradesh, regional parties have been in power with a focus on competing welfare policies. Though the Congress party ruled the combined AP in competition with the TDP, after YS Rajasekhara Reddy came to power in 2004, the welfare initiatives gained autonomy from the Delhi Congress.

Currently, Andhra Pradesh is leading in online transfer of welfare scheme funds into women’s accounts. This is playing a key role in the expansion of rural and urban markets. The money is being regularly ploughed back into the market, increasing the GST income for the state.

The fact that Andhra Pradesh maintains a higher rank in all economic indexes than any other Northern states itself shows that the state’s agrarian economy is more robust than any other state in the country. Even though it does not have a long-standing industrialised capital city and most of its wealthier investors are in Telangana, it still maintains its economic balance. Its potential lies in its coastal agrarian production and the better management of welfare initiatives.

With newly built school and college infrastructure, a more focused English-medium school and college education in the government sector, the state’s economy is poised for growth in the future.

Secular cultural environment

On the whole, the Southern states are known for their secular cultural environment where reduced superstitions have weakened caste controls, which in turn has helped them maintain better economic development. This is the reason why, although three out of the five Southern states (Kerala, Telangana, and Andhra Pradesh) are small in size, they constitute 30% of the national GDP.

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Communal politics keep the states in a constant state of fear and insecurity, and also promote competing superstitions. In such an environment, developmental discourse in civil society is bound to be less and less. Educational institutions and the media tend to focus on communal stories rather than promoting scientific temper, which is key to economic development. The Hindutva school, which is prevalent in many Northern states, has made people compete with communal Muslim ideology, further hindering scientific and developmental discourse. Karnataka in the South is slowly getting pushed into that mode.

The role of an expanded English medium educated middle class in these states cannot be underestimated. Without a globally mobile English medium educated middle class, no state can improve its economy in the globalized world. Even Gujarat and West Bengal could not develop a good English-medium-educated Shudra/Dalit/Adivasi section of society so that they could join the vibrant middle-class of the world. To some extent, South Indian states have been able to do that.

In West Bengal and Gujarat, both the communist and Hindutva models have failed in creating a competing middle-class from the OBC/Dalit/Adivasi sections. On the other hand, the competing Ambedkarite liberalism with robust electoral competition plays a critical role in strengthening the economy of a state, with a focus on education, health and other welfare schemes.

(The Federal seeks to present views and opinions from all sides of the spectrum. The information, ideas or opinions in the articles are of the author and do not necessarily reflect the views of The Federal)

Kancha Ilaiah Shepherd is former director, Centre for the Study of Social Exclusion and Inclusive Policy, Maulana Azad National Urdu University, Hyderabad