IMA’s Custom Research Service

Monday January 1, 2018

Federalism: India’s Power Unleashed

The IMA study of state-level trends in income, consumption, investment, and employment reveals significant - and business-relevant - variations across India’s regions

India’s future lies in its states. When India grows at 7% , some states grow at double digits, while others barely grow. Rising federal freedom, as enabled by the Centre, has started with strong fiscal loosening and more power to states, but much remains to be done. All of that, however, is irrelevant after a point. The Centre does not, and is not meant to, direct the future of India’s states. Each state and its government must carve its destiny. Getting it right can reap huge benefits in relatively short time spans, as states like Bihar have proven on occasion, whereas getting it wrong can bring a nation down, holding back millions from prosperity and creating internal migration that strains systems. A case in point is the rise – and fall – of Maharashtra and Tamil Nadu. The unevenness of growth in such massive states must be better understood for their trends, possible outcomes, and most of all, for overall competitiveness, of business destination, and of the quality of living. An ongoing IMA research project reviews all the available state data and compares states across multiple parameters, and views it from multiple lenses the quality of growth of India’s states and ultimately, that of India.

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