09 March, 2021

‘Income Data Hides Much’

How essential is industrialisation for raising a state's income? Kerala and Bihar are two important case studies, says former finance secretary EAS Sarma...

‘Income Data Hides Much’

Former finance secretary E.A.S. Sarma has been a top policymaker. Having led key ministries and advised the erstwhile Planning Commission as a bureaucrat, he now campaigns for alternative and sustainable development policies. Excerpts from an interview with Zia Haq:

We have made two charts to compare per capita incomes in 1960 and 2014. Why are Bihar and UP still at the bottom? The Orissa story, in contrast, is remarkable. What explains its recovery without any massive investment or magical reforms?

Net per capita income is not always a rob­ust indicator of a state’s progress. Bes­ides other shortcomings, studies show that changes in this figure have no strong correlation with changes in the human development indicators of a region. Mining activity, for example, may cause a sharp spurt in the state’s income even though the bulk of the minerals’ value is taken away by the mining companies, people’s health is adv­ersely affected and the environment permanently scarred. The...

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