WORKING PAPER 42/2009
This paper analyzes the inter-state imbalances in three major sectors of the economy, namely, education, health and family welfare, and water supply and sanitation for fifteen major states. It uses two principal indicators namely the per capita GSDP (reflecting the disparity in fiscal capacity in various states) and per capita government expenditures on priority sectors, reflecting how fiscal capacities are translated into differences in government fiscal intervention in providing services. The study shows that the GSDP of six major states - Bihar, Uttar Pradesh, Orissa, Assam, Madhya Pradesh and Rajasthan grew only at below 5 percent during the study period 1993-94 to 2005-06. While Tamil Nadu, Maharashtra, West Bengal and Andhra Pradesh grew at 5-6 percent, the remaining states at 6-7 percent. The ratio of maximum (Punjab) to minimum (Bihar) per capita GSDP rose from 3.17 in 1993-94 to 5.37 in 2000-01 and thereafter fluctuated between 3.64 to 3.90. The ratio of maximum (Kerala) to minimum (Bihar) per capita expenditure on education fell from 2.52 to 2.22. In the case of health, the ratio of maximum (Punjab) and minimum (Bihar) widened from 2.11 to 3.59 and in the case of water and sanitation, the ratio of maximum (Tamil Nadu) and minimum (Bihar) increased dramatically from 5.75 to 15.8 during the study period.