On the contrary, states which have lower growth rates despite their fiscal deficits overshooting the 3 per cent target are Kerala, Punjab, Rajasthan, Tamil Nadu and Uttar Pradesh, it added.
Gujarat, Madhya Pradesh and Haryana were the top three fastest growing states in the last four fiscals, while Punjab, UP and Kerala featured in the bottom three, a report by Crisil said today. There are wide divergences in state-level performance as they are getting exposed to increasing competition, said the report titled ‘States of Growth’ by ratings firm Crisil. The performance of states was gauged on parameters like growth, inflation and fiscal health. “Gujarat, Madhya Pradesh and Haryana were the fastest growing states between fiscals 2013 and 2017. Bringing up the bottom were Punjab, Uttar Pradesh and Kerala,” said the report. Gujarat was the top performer in construction and manufacturing growth, while Chhattisgarh and Haryana were among the top performers in manufacturing and trade, transportation and communication services, it said. “These states, therefore, are likely to have been more successful than others in job creation. In Gujarat specifically, the share of manufacturing has jumped from 28.4 per cent to 34.4 per cent of gross value added (GVA)–which is close to levels seen in China.”
These states recorded the highest growth in aggregate GVA of labour-intensive sectors. The report pointed out that the poorer states aren’t growing faster. States with the lowest GDP growth during 2013 to 2017– Kerala, Punjab, Uttar Pradesh, saw below-average growth in GVA of their labour-intensive sectors. On price rise front, inflation in 11 major states fell faster than all-India average. In fastest growing Gujarat, Haryana and Madhya Pradesh, it stayed below national average of 6.8 per cent.
Going by the fiscal math, the report revealed a mixed picture as some states were highly indebted and ran large deficits and other continued to perform well on both fronts.
On level of indebtedness and deficit, Chhattisgarh, Karnataka and Maharashtra were the top three states and Uttar Pradesh, Punjab and Rajasthan came in the bottom three. Chhattisgarh, Karnataka, Maharashtra, Gujarat and Telangana were among the states which successfully managed high growth levels while keeping their fiscal deficits below 3 per cent.
On the contrary, states which have lower growth rates despite their fiscal deficits overshooting the 3 per cent target are Kerala, Punjab, Rajasthan, Tamil Nadu and Uttar Pradesh, it added. “We conclude that Gujarat and Maharashtra performed well on all the three key macroeconomic parameters, having a growth rate above the national average, inflation and debt levels below the national average, and fiscal deficit less than the target set by the Fiscal Responsibility and Budget Management (FRBM) Act between fiscals 2013 and 2017,” Crisil said. Conversely, Bihar, Rajasthan and Uttar Pradesh were laggards across these parameters with low growth rate, high inflation and debt compared with the national average, and a fiscal deficit overshooting the FRBM target.