Friday, March 08, 2013

Economics 420 : Gujarat and Bihar Growth Rate

So this nonsense about Bihar's growth rate versus Gujarat's has been going on for some time now.

As it turns out, Bihar has the highest growth rate of per capita income in the country. Poor Gujarat is supposed to be a lowly 11th. (Per Capita growth rate of 11.75% and 6.91% respectively)

http://www.livemint.com/Money/70sMNVRlBE7afEwTt8GEtO/Bihar-tops-in-per-capita-income-growth-ranking.html?ref=ms

So let us take this measure - Per Capita Net State Domestic Product at Constant Prices, based upon MOSPI data.

http://mospi.nic.in/Mospi_New/upload/State_wise_SDP_2004-05_14mar12.pdf

In 2010-11 Gujarat's is Rs. 52,708 and Bihar's is Rs. 13,632. Ok, now there are data availability issues so let's take these figures and grow them by the growth rates of per capita income given by Mint. With this, Per Capita Income grows annually by Rs. 3,642 for Gujarat and by Rs. 1,602 for Bihar.

SO GUJARAT'S PER CAPITA INCOME GROWS BY MORE THAN TWICE AS MUCH AS BIHAR'S DOES!


Bihar is a bullock cart accelerating from 13.6 kmph to 15.3 kmph while Gujarat is a Maruti 800 accelerating from 52.71 kmph to 56.3 kmph.

With a higher base, even the fact that the absolute growth rate is better is in itself remarkable. Here these nincompoop economists are comparing growth rates relative to the state's own base.

With similar logic, China's growth is more than twice that of India's on a per capita basis. And that is closer to what one knows intuitively rather than the 1-2% difference that one sees in relative growth rates, which is a bigger shame than economists like Montek will admit it to be.

2 comments:

sansk said...

Most of modern economics is bunkum to put it mildly. 99.999999 % of modern economists are either fraud and/or idiots.

Don't believe me ?

OK, just try to find out how many of them support/encourage the pillage of savings of unsuspecting citizens via inflation (and death tax). According to my observation that is nearly all of them.

Now, consider how many are on payroll of (or want to be on the payroll of) .gov or Wall Street. That also is nearly all of them.

Last exhibit: just observe how economists run a country when given a chance. I have observed they invariably run the country into ground, e.g. Russia (soon after fall of USSR), modern USA, EU's Super Mario Brothers (Draghi and Monti) and Manmohan Singh, India's Sorrow.

non-carborundum said...

Sansk

Agree that economists shouldn't be the ones to run economies. And even the most free-market economists start turning into Keynesians once hijacked by governments. Case in point - Raghuram Rajan.