Change in Rank of States / Provinces (Current Prices) 2005-2023
Source: RBI Handbook of Statistics on Indian States https://www.rbi.org.in/Scripts/AnnualPublications.aspx?head=Handbook+of+Statistics+on+Indian+States and National Bureau of Statistics of China data on Gross Regional Product and Population https://data.stats.gov.cn/
What has the last twenty years of economic progress meant for growth of different regions in India and China? Have they become more equal or has regional inequality increased? We partly addressed this for India in an earlier blog last year on “How Have Different States Done Since 1991?” https://cprindia.org/cpr-insights-how-have-different-states-done-since-1991/
To get at this question, look at the per capita net state domestic product of states in India and per capita gross regional product of provinces in China. Then rank these regions, i.e., states and provinces, for each year in descending order, i.e., the richest region is ranked 1. Next, the average of the rank over three years (2005, 2006 and 2007) is compared to the average of the rank in the final three years (2018, 2019, 2023), excluding the years 2020 to 2022 on account of the CoVID pandemic. The current rank is then subtracted from the initial rank. So, if a region is ranked 6 in the final three years and its initial rank was 10, then the difference is 4. As one can see, a larger positive number means that the region has improved more than one which has a smaller positive number. A negative number means that the region has fallen behind relatively, compared to its initial rank.
Figure 1 plots the initial rank of the region in 2005 with the change in the rank of the region. An upward slope would imply that the change in such a region was more if a region had a high initial rank, i.e., if it was relatively poorer. This would imply convergence or a decrease in regional inequality. Similarly, a negative slope would imply an increase in regional inequality.
It would appear that regional inequality has not changed much in the last few years by this measure. However, in China, Anhui and Sichuan, two relatively poor provinces have seen the most improvement, while in India, it is Sikkim and Telangana, closer to the middle of the distribution. On the other side, in China, Heilongjiang, in the far northeast corner and Hebei, with older state-led industry, even though it is right next to Beijing, have seen the worst decline in rankings, though they started in the upper half. In India, it is Punjab, with its agriculture base, like Heilongjiang, and Nagaland, in the northeast have seen the largest fall in rankings.
But, is that the whole story?