The Hindu Newspaper Analysis

Understanding Economic Disparities in Indian States and Impact on Federalism

Context and Introduction

• The Economic Advisory Council to the Prime Minister (EAC-PM) released a paper titled “Relative Economic Performance of Indian States: 1960-61 to 2023-24”, analyzing state-level economic disparities.
• Data highlights each state’s contribution to the national economy, revealing a growing economic divide, with richer states pulling further ahead.
• Maharashtra leads economically with per capita income at 150% of the national average, but internal inequality exists, such as between wealthy Mumbai and impoverished Vidarbha.

Regional Disparities and State Performance

• Western and southern states consistently outperform northern and eastern states, with exceptions like Delhi and Haryana.
• This divide risks the federal structure’s integrity, with wealthier states questioning their share of resources from the Centre.

Federalism at Stake

• States with stronger economies feel underserved in resource allocation, as demonstrated in recent conclaves.
• This sentiment echoes similar protests from the year 2000, signaling a weakening in federalism’s cooperative spirit.

Factors Influencing Regional Performance

• Liberalization (post-1991) benefited southern states and coastal areas.
• Higher investments in affluent states boost their economic performance, creating a virtuous cycle of wealth concentration.

Investment Dynamics

• Investment sources: Public (policy-driven) and Private (profit-driven). Public investment may support backward regions, while private capital typically favors developed areas with robust infrastructure.
• Investment success relies on governance quality, infrastructure, and market size—areas where richer states excel, attracting most private investments.

Private Sector and Liberalization

• Since 1991, 75% of investments are private, mainly flowing to prosperous states, enhancing their economic advantage.
• This trend leaves poorer states with lower credit-deposit ratios and a higher unorganized sector.

Special Cases: West Bengal and Kerala

• States with strong labor movements and left-leaning politics (e.g., West Bengal and Kerala) see reduced private investment.
• Border states also face reduced investment due to security concerns.

Political Influence on Investment

• Opposition states allege discrimination in public investment, with “Double Engine Sarkar” indicating political alignment impacts funding.
• Cronyism and the black economy disproportionately affect poorer states, deterring investment and limiting growth.

Threat to Federalism and Policy Needs

• Growing state-level economic disparities undermine federalism, necessitating policy shifts to strengthen governance and infrastructure in lagging regions.
• States must improve governance and reduce corruption, while the Centre should focus on unorganized sector support to boost demand in poorer states.

Way Forward

• The Centre’s focus should shift from the organized to the unorganized sector, which could increase demand and, in turn, attract private investment in less developed states.
• A balanced growth strategy would lower regional disparities without stalling the progress of affluent states, enhancing federal unity and national cohesion.

 

 

 

 

The Hindu Newspaper Analysis

Towards Peace and Stability in Myanmar: ASEAN and India’s Role

Context and Background

• ASEAN’s 44th Summit (October 6-11, 2023, Vientiane, Laos): Regional concerns over Myanmar’s ongoing crisis.
• Post-2021 military coup: Myanmar remains in turmoil despite ASEAN’s Five-Point Consensus aimed at peace.

Myanmar’s Situation and Regional Impact

• Civil War: Ongoing conflict between the military junta, resistance groups (Ethnic Armed Organisations, EAOs), and People’s Defence Forces (PDFs).
• Resistance Control: Rebels control key border trade routes, aggravating the humanitarian crisis with over 18.6 million people, including 6 million children, in need of assistance (UN).
• Humanitarian Crisis: Displacement and violence affecting the region’s stability and ASEAN’s credibility.

ASEAN’s Response and Challenges

• Five-Point Consensus: Aims for peace, inclusive dialogue, and humanitarian aid; limited success due to the junta’s non-cooperation.
• Diplomatic Engagement: Despite three years of boycott, Myanmar’s presence at the summit signals a partial opening for dialogue.
• Member Differences: Countries like Indonesia, Malaysia, and the Philippines push for stronger action, while Thailand, Cambodia, and Laos maintain ties with the junta.
• Consensus-Based Decision-Making: ASEAN’s unanimity requirement often dilutes the response.

The Need for Inclusive Dialogue

• Thailand’s Troika Initiative: Proposed informal talks with Indonesia, Laos, and Malaysia to bridge diplomatic gaps.
• Engagement of All Stakeholders: For meaningful progress, ASEAN must involve non-state actors like the National Unity Government and EAOs.

India’s Myanmar Policy

• Strategic Importance: Myanmar is central to India’s Act East Policy, serving as a land bridge with ASEAN and sharing a 1,643 km border.
• Balanced Relations: India maintains ties with the junta while promoting democratic processes.
• Connectivity Projects: Initiatives like the Kaladan Multi-Modal Project and India-Myanmar-Thailand Highway aim to boost trade.
• Quick Impact Projects: Recent MoUs funded by India ($250,000) focus on agriculture, education, and disaster management, though political instability poses challenges.

Security and Policy Adjustments

• Security Concerns: Cross-border militancy and refugee influxes led to India curbing the Free Movement Regime and enhancing border security.
• Internal Resistance: Indian states have mixed responses to stricter border policies.

Conclusion

• India’s Strategic Engagement: New Delhi aims to broaden ties with various stakeholders in Myanmar, balancing strategic interests and peace efforts.
• ASEAN-India Collaboration: A unified, inclusive approach, involving all key stakeholders, is essential to foster peace and preserve regional stability.