In this column, I look at our state in a comparative perspective. I identify those states that are similarly placed as ours and then look at how our state compares with these in a few growth indicators. A comparison of similarly placed states will help development planners in at least two dimensions. They serve as a counter-factual, albeit an imperfect one to delineate impacts of alternative scenarios. These comparison states can also serve as counterpoints for cross-validation of statistics. In the former case for example, we can make a rough calculation on the revenues that can be gained by legalizing liquor by looking at Mizoram’s experience. Since Mizoram and Nagaland are similarly placed we can expect that with the necessary modifications any change in excise policy in Nagaland will result in revenue gains similar to that seen in Mizoram. So also for cross-validation of statistics of crop production, yield and proportionate area covered. Any lacunae in availability of data can thus be made good if we rely on certain rules of thumb. This is not to say that there will be perfect congruence between these comparison states and Nagaland but they will provide a meaningful touchstone for comparison. But before we do that we have to decide on a basis for comparison.
Deriving a basis for Comparison
The obvious choice for the states that can be compared to ours is in the North-eastern region. There are commonalities with respect to the terrain and lay of the land, culture in terms of agricultural practices and customary practice in terms of affinity to tribes etc: States like Uttarakhand, Himachal Pradesh and Jammu and Kashmir, have similar terrain to ours but have more than thrice the land area and population of our state. Since the latter gives an indication of economic potential by being proxies for natural and human resource potential in the state, we cannot meaningfully use these hilly states for a comparison. I also use an elevation index that was used in a study by Institute of Economic Growth. The study classifies Nagaland as a primarily hilly area defined as having a proportion of elevation ranging between 0.1 and 0.04 and having a proportion of hills that are approximately more than 3% relative to the plain areas. States in the same category apart from Manipur and Meghalaya include Jammu and Kashmir, Himachal Pradesh and Uttarakhand. Even among the North-eastern states we do not take Assam for comparison because of the lower proportion of land that has a higher level of elevation.
As seen in Figure 1 below except Arunachal Pradesh for area all the other states are bunched together. Arunachal Pradesh has a large area but because of the poor availability of human resources in that state I feel that it makes sense to club Arunachal with the rest of the North-eastern states under consideration. This validates our selection of the comparison group of the north eastern states, Assam excluded.
Figure 1: Population (‘00) and Area (km2) of Comparable States
Growth Rates
Now we look at certain indicators of growth primarily the Compound Annual Growth Rate of Per-capita NSDP at current prices as well as the CAGR of the NSDP at current prices of all the sectors over a 20 year period between 1993-94 and 2013-14. The data has been taken from the Handbook of Statistics on Indian States 2015-16 published by the Reserve Bank of India.
We use NSDP at current prices because one of the states in our comparison group, namely Mizoram has not reported statistics for constant prices. We splice the indices to get a common series and the growth rates are computed using the compound growth formula. The results of CAGR across sectors are presented in the graph below.
The readers are reminded that the growth rates have been arrived at without applying the price deflator. The impact of inflation on the growth rates have not been netted out. Hence, these are not the real growth rates in the economy but nominal growth rates. For our purposes, which is mainly for comparative purposes the above analysis is robust as we are not bothered as much about the levels as about the relative positions. Our analysis could be wrong only if the rate of change of prices are different in different states.
In the graph below the CAGRs of Nagaland are third from the right. An analysis of the graph shows that for the twenty year period under consideration, the overall per capita state domestic product and services in Nagaland grew at a rate slower than our comparison states in the region. Our growth rates were impressive in agricultural sector where our rates were the highest in the region.
Figure 2: CAGR of PCI and Sectors at current prices
Prospects If we have to maintain the high and robust rates of agriculture for the next 20 years, then our state has to introduce innovations in marketing infrastructure so that farmers who grow crops can be assured of incomes and returns. We should be careful enough to veer away from the previous bitter experience of ginger farmers in some areas of the state who faced difficulty in converting their crops to incomes. Our state should avail of the opportunities presented by the National Agricultural Market Scheme, aimed at unification of agricultural markets if incomes have to be kept buoyant for farmers in our state. In addition, to the agricultural and allied sector we should also focus on improving our performance in the services.
Our services sector growth rate in comparison to the other states is the lowest. This is both a cause for worry as well as an opportunity for future growth. Low growth rates imply that the potential for growth remains unexploited and hence a bright future. This sector presents an opportunity for innovative government action. There is a real possibility for government to partner with the private sector as in the areas related to skill development to enhance the productive potential of our economy. Such an active partnership will have the salutary impact of absorbing our young and burgeoning work force.
(The author is an IAS Officer of Nagaland cadre and can be reached at vyasan_r@yahoo.com. The views expressed above are personal.)
.JPG)
