Thursday, December 10, 2009

Telangana - The mind argues for a separate state while the heart wants a United Andhra

<< Excerpt from an Email >>

I perfectly agree with the capitalistic view point.
I was wondering what points do I have in support of a unified state from a capitalistic view point and I couldn't find one on the periphary.

Small Government means closer to people. More efficiency - in Theory. It is the equivalent of a small business. Or even better analogy - like a tracking stock of an independent business unit OR a spin off of a successful division of a company. As you see, in the capitalist model - separation is aimed to get more valuation out of this new entity.

However, the danger in extrapolating the capitalistic model to Indian politics is two fold.
1) As Indians, we are emotional and started to pitch the telangana vs. andhra card in causing public damage. Unfortunately, lives are lost in the process and there is more value destruction than you see in a capitalistic spin off. In other words, the process of transition is emotional and painful.
2) Also, I wonder - If these separatist states couldn't get their fair share within the same state, how do they expect to get a fair share when they compete at the center with 28 other states (last time I checked a few hours ago) ?

Keeping the emotional aspect aside and curious to learn if there are any reports on the performance of the new states that got created in the last decade, I found the following link.

Here are the observations
1) Chattisgarh separated out of MP in 2000. %age growth of GDP over previous year was better in each of the following years compared to MP.
2) Uttarakhand came out of UP in 2000. Same case in 6 out of 7 years.
3) Jharkand came out of Bihar in 2000. This one was interesting. Every year one did well, the other was suffering.There was no clear pattern that a smaller state was doing any better.

In further analysis, I downloaded the attached from Indian Government's Public Finance statistics page.
See page 122 for per capita GDP of states.
The three separated states were doing much better on a per capita basis.

So, though my heart was with united AP, my mind asks me to think of separation as a good thing.
And now... that is the problem!!