North India is different

North India is different

India can be, in the words of an Indian bureaucrat, “Less of a country and more of a subcontinent of states”. Regionalism, known to Indians as “sub-nationalism,” shows up in the relative affluence and poverty of different states. The star economic performer is the booming state of Gujarat, on the west coast, northwest of Mumbai. Its widespread industrialization, booming agriculture and expanding service sector are openly admired across India. Other booming states are in the south: Maharashtra (home to Mumbai) on the west coast, and Andhra Pradesh on the east coast. Then there is a band of poorer states running across India’s broad northern middle, from Jammu and Kashmir in the far north to Uttar Pradesh, east of Delhi. With a few exceptions they lag the national growth and some seem almost incapable of catching up with the booming south.

Although there are pockets of strength, Indians are concerned that the northern region is falling behind the rest of the nation. There are several reasons for sub-national disparity. The first centers on a phrase that Indians use repeatedly: “land-locked.” India has 4,671 miles of coastline, and being adjacent to the sea has undeniably helped Gujarat, Maharashtra and Andhra Pradesh. Direct access to the sea helps them avoid the notorious inland infrastructure deficit that strangles the land-locked states’ economies.

Then there is a thick bureaucracy and its thousands of regulations, rules and clearance certificates. A tradition of paternalism in government holds political control in higher esteem than ease of doing business. All these factors have held the north back, even resulted in backsliding. As KPMG India CEO Richard Rekhy notes, the automotive industry started in the north but migrated south to more business-friendly states. The IT industry was similarly born there, then drifted south, making the southern city of Bangalore, in the state of Karnataka, synonymous with the business.

Indian leaders are too keenly aware that two decades of rapid economic expansion has come off the rails. Punjab’s Sukhbir Singh Badal said, “What went wrong? How come we’ve gone down? One of the things is indecisiveness.” He acknowledged that India’s innumerable regulations have strangled growth, making it difficult to remedy the interior’s poor infrastructure. He said that while Punjab is determined to have a net surplus in electrical generation by the end of 2013, regulations around environment, coal supply and water use have threatened to strangle the goal. “It’s easier to climb Mt. Everest than it is to get an environmental clearance,” he said. Malvinder Singh, chairman of the Confederation of Indian Industry (CII) for the northern region, called not just for better infrastructure to attract investment but also more attention to human capital—education, public health and the appalling economic condition of India’s women.

And yet India’s north has splendid potential. The state of Punjab was the author of India’s green revolution in the 1960s and remains one of the country’s great agricultural regions and the most evolved consumer-goods market. Haryana produces an enormous quantity of agricultural products. Haryana and Delhi have manufacturing assets. Delhi has the nucleus of modern infrastructure, with a brand-new airport and a growing network of expressways. Jammu and Kashmir (J&K) have great tourism potential.

Have you experienced the disparity between the states?