Punjab tops states in prosperity, Kerala on equity

Maharashtra has the highest per capita income, but when it comes to prosperity, Punjab tops the chart while Madhya Pradesh is at the very bottom. In terms of equity, Kerala pips Punjab to the top slot, while Andhra Pradesh has the highest levels of disparity, says a new study that ranks states based on pattern of ownership of consumer durables.

The soon-to-be released report by ratings and research firm Crisil, available exclusively with TOI, comes at a time when there is intense debate about the development model of states and a race among them to spread prosperity to the masses. Several other agencies and panels have used different methodologies to rank states.

Crisil has developed indices of prosperity and equity (the agency terms it ‘equality index) based on the pattern of ownership of consumer durables across various regions in a state, using the 2011 census data. Neither do they account for inter-state differences in ownership of financial or other assets, such as land, nor do they capture differences in education levels across states , which is an important indicator of future income and future standard of living.

The findings show that Punjab has the highest proportion of households with all durables, including a computer (10 in every 100) and the lowest proportion of households with no durable asset, not even a mobile or a bicycle (just over 4%). The agency attributed this to the success of agriculture in the state, along with high minimum support price and public procurement of grains.

Number two is Kerala, where high level of remittance, along with healthy farm and tourism sectors, has brought about prosperity. It is followed by Haryana, Karnataka, Tamil Nadu and Gujarat, indicating that high rates of growth have brought about prosperity measured in terms of ownership of cars and two-wheelers, mobile phones and computers.

Crisil has classified Narendra Modi-led Gujarat in the top bracket of three states with high prosperity and high equality among the high-growth states (Kerala and Punjab being the others). While Kerala and Punjab also have the least disparity – measured by asset ownership between their capital cities and the rest of the state – Chhattisgarh, Bihar and Jharkhand, which have low levels of prosperity, rank high as most households, equally, do not own assets. The analysis shows that gauging states merely on the basis of ownership of consumer durables may not be the best way to measure equity.

Among cities, Gurgaon is the most prosperous, with one in five households owning an asset, while Chennai tops the list among state capitals, followed by Hyderabad and Bangalore. Patna and Raipur put up the worst show. In southern states, barring Kerala, the capital cities seemed completely cut off from the rest of the state: Tamil Nadu, Andhra Pradesh and Karnataka fared badly on Crisil’s equality index.

BJP-ruled Madhya Pradesh has attracted attention for its progress across sectors. “Madhya Pradesh is the least prosperous state. Moreover, there is large disparity in living standards among households in Bhopal, as well as between Bhopal and the rest of the state. For example, 15% of households in the capital have all assets, which is comparable to Mumbai. However, over 12% of households in Bhopal have no durable assets, compared to 2.2% in Mumbai,” the study said.

Maharashtra has the highest level of real income per person (per-person state gross domestic product at 2004-05 prices) among major Indian states. But the penetration of household ownership of durable assets in the state is lower than six others.

There is significant disparity in living standards within Maharashtra, Andhra Pradesh and Karnataka. For example, only one in 33 households in Hyderabad did not own a durable, but as high as one in five outside Hyderabad did not have an asset. Growth in these states has been driven by financial or IT and IT-enabled services that have selectively benefited the skilled workforce in the capital city, resulting in high disparity in living standards.

The two indices were developed using census data on the ownership pattern of consumer durables such as television, mobile phone, bicycle, computer/laptop and automobile. Financial assets, housing, education and health parameters, which are also used to measure standard of living, haven’t been factored here.

The state prosperity index measures the average standard of living in a state. A prosperous state has a high proportion of households owning four durable assets – television, computer/laptop, telephone/mobile phone and two-wheeler/car/jeep – as well as a low proportion of households with no assets at all (neither radio nor bicycle in addition to the above four assets).

The state equality index measures the difference in living standard between a capital city and the rest of the state. The lower the difference between a capital city and the rest of the state with households having all or no assets, the higher is the state equality index.

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