Assembly Elections 2023: Beyond The Ballot — States Must Unlock Demographic Dividend

One could also compare the states with states in a federal polity such as the US of A. For sure, there are wide variations in area and population besides granular economic and geographic characteristics. Income levels for instance are incomparable – the lowest per capita income in the US is $4,6300 in Mississippi -- given the size of the US economy.  That said, comparisons do illustrate the potential for economic expansion -- and indeed present possibilities for aspirational models.

For instance, Rajasthan’s economy – driven by tourism, mining, petro exploration and agriculture – in many facets mirrors the economic character of Arizona. In a sense Rajasthan is where Arizona was prior to the 1950s when copper was its mainstay, when the focus was mineral extraction, lumber, cattle and crops. Today, Arizona has a big manufacturing sector with a focus on aerospace and advanced tech and boasts of a GDP of $475 billion. Rajasthan could leverage land resources, its lux advantage, stature as a leader in renewables and demography to lure advanced tech and sustainable manufacturing for global markets.

Madhya Pradesh in many ways could be compared to Minnesota of the 1960s and 1970s. Like Madhya Pradesh, Minnesota thrives on agriculture, dairying, food processing with an emerging manufacturing sector and has a GDP of $448 billion.  Chhattisgarh resembles West Virginia which similarly depends on mining and agriculture and has a GDP of $97 billion. Odisha is comparable to Louisiana with a GDP of $291 billion given the similarities in economic character. The aspiration model for Telangana could be Georgia with a GDP of $767 billion. Georgia, like Telangana, has an agri base, is known for educational institutions and a destination for manufacturing.

The promise of change is located in the potential of a young population. The need to unlock demographic dividend is not just an aspiration. It is now a compulsion. The need for employment tops every opinion poll and survey conducted by platforms in the past few years. India annually adds around 8 million persons to the job market. For sure India is the fastest growing large economy but it must grow at a higher rate for it to deliver growth across the political economy.

Growth must be catalysed at ground zero and that obligation is effectively on the states. Consider agriculture. Nearly 45% of the working age populace is engaged in farming, living off a sixth of national income. There is no dearth of policy instruments. The rush to offer waivers, income support and higher MSP underline the need to install backward-forward linkages, leverage FPOs to enable commercial farming. The PM-KUSUM Yojana for solar pumps can make farming sustainable, wider adoption of agrivoltaics can raise returns on land holdings; bringing farm produce on ONDC platform can deliver access to markets.

States need to capitalise on emerging opportunities for shifting the workforce from low-income farms to high productivity sectors. Success demands states reform labour laws, enable land acquisition and unclog regulatory cholesterol.

Companies and countries are migrating from just-in-time to just-in-case economic models. India is a preferred destination for nearshoring or friend-shorting plants. Climate change is driving energy transition. India is ideally placed to ramp up capacity in renewables and leverage the potential of green hydrogen. Transnationals are looking to set up global capacity centres. The mechanism of productivity linked incentives offers states to map need and competitiveness to woo investments.

Urbanisation is a well-documented force multiplier for growth. State governments must end the perpetuation of unplanned urbanisation and plan for demand which will follow growth. There are over 3,900 Census Towns awaiting liberation. This affords states the opening to create new urban habitats and create jobs, demand, consumption, investment and growth in the process.

There is a misplaced belief that the power of propelling the virtuous cycle of growth rests on the union government. The promise of India’s potential is located in the domain of states and awaits awakening and deliverance.