The Making of Miracles in Indian States Andhra Pradesh, Bihar, and Gujarat Studies in Indian Economic Policies Series

Growth miracles typically have been studied at the country level. The Making of Miracles in Indian States breaks from that tradition and studies three growth miracles in India at the level of the state: Andhra Pradesh, Bihar, and Gujarat. These are three of the largest and most diverse states in India. Andhra Pradesh is situated in the south of India, Bihar in the east, and Gujarat in the west. Bihar is the poorest among all states in India, Gujarat the third richest among the largest eighteen states, and Andhra Pradesh in the middle. Andhra Pradesh and Gujarat have long coastal lines while Bihar is landlocked. Yet, all of these states have grown at rates exceeding 8% for an entire decade in the 21st century. Despite many differences in the initial conditions, several common threads tie the high-growth experiences of the three states. First, accelerated growth has permitted acceleration in the growth of development expenditures in all three states, which has helped improve connectivity to markets. Alongside this growth, poverty has seen accelerated decline. Second, the composition of growth matters. Growth in high-value commodities such as fruits and vegetables, commercial crops, dairy, and animal husbandry in Andhra Pradesh and Gujarat has led to accelerated reduction in rural poverty. However, the failure of labor-intensive industry has stunted the migration of workers out of agriculture into industry. Third, the quality of leadership that brings improved governance with it is central to improved outcomes in the states. Visionary leaders---Chandrababu Naidu in Andhra Pradesh, Nitish Kumar in Bihar, and Narendra Modi in Gujarat---played critical roles in the making of all three miracles. Fourth, the three studies also bring out the importance of pro-market reforms and the adoption of technology in development. Finally, the studies show that good economics is also good politics: voters reward the chief ministers who bring about significant improvement to the people's lives.

Arvind Panagariya is a Professor of Economics and Indian Political Economy at Columbia University, Non-resident Senior Fellow at the Brookings Institution, and a former Chief Economist of the Asian Development Bank. Panagariya has written prolifically on global trade policy issues and economic reforms in India. The author of a dozen books, he has also published technical papers in many leading journals and other publications. Professor Panagariya writes an influential monthly column in the Times of India and has been honored with the Padma Bhushan by India. Dr. M. Govinda Rao is a well known scholar in public finance in India. Presently, he is a Member of the Fourteenth Finance Commission, Government of India. His past positions include Director of the National Institute of Public Finance and Policy in New Delhi and Director of the Institute for Social and Economic Change in Bangalore. Dr. Rao was also a Member of Economic Advisory Council to the Prime Minister of India. He has chaired and was a member of several committees. He has written extensive publications in referred journals in addition to his 14 books and monographs.