India’s economy is undergoing a period of rapid but uneven transformation. Some states and territories are becoming much wealthier than others, very quickly. So far, this has not translated into worsening political and security risks, but this situation will not necessarily prevail.
India’s gross domestic product is growing at around 7 per cent annually, according to official data. Put another way, every year it is adding a new economy the size of Bolivia’s to its own. The regional distribution of this newfound wealth is highly uneven. In the space of a decade, between the 2004/05 fiscal year and 2014/15 (the most recent for which full figures are available), the wealth of some states quadrupled, while others remained mired in poverty.
The most dramatic success story is the small Himalayan province of Sikkim, a protectorate annexed by India in 1975 and until 14 years ago claimed by China as part of Tibet. For the 2009-10 fiscal year, Sikkim posted annual economic growth of 89.93 per cent as hydropower projects came to fruition and tourists flocked to its picturesque hillsides. Its relatively well-diversified economy and – crucially – small population have lifted per capita GDP to a nominal INR83,500 a year (around USD1,300).
This is still far below the wealthiest part of the country, Goa, which has India’s best-developed tourism industry, drawing wealthy Western visitors in their millions, and which has a per capita GDP of USD2,100, placing it slightly ahead of the capital New Delhi (USD1,800). That these are the richer parts of India is a reminder, were one needed, of how poor most of its population remains, even when their incomes are adjusted for purchasing power.
At the bottom end of the scale is the landlocked eastern state of Bihar. Although much has been made of its strong recent economic performance under Chief Minister Nitish Kumar, this is from a very low base. Bihar is poorer today than Goa was in 1993. It is perhaps unsurprising, then, that the state remains a hotbed of the kind of Maoist Naxalite insurgents who former prime minister Manmohan Singh described as the great threat to India’s internal security, and who stage frequent attacks on economic infrastructure and state employees in eastern India.
Not the whole story
However, the read-across from poverty to insecurity is not straightforward in India. As intimated, some Himalayan provinces such as Sikkim have very different ethnic, religious and historical profiles to India’s Hindu, Indo-Aryan majority, cultural facets that perhaps contribute to their relative prosperity. Such cultural differences can just as easily provoke unrest.
The north-eastern state of Nagaland is in a case in point. Per head, it is in the same wealth-bracket as relatively affluent southern states such as Kerala, but this is where the resemblance ends. Nagaland is a Christian-majority state, with a Tibeto-Burman ethnic majority. Such cultural differences can have a positive economic effect – women have a higher social status in Nagaland than elsewhere in India, and the Naga do not expend so much of their wealth on lavish weddings and dowries that drives many Hindus into debt. However, these cultural differences are also a source of conflict. Many Nagas regard people from elsewhere in India with great suspicion. In late 2016 and early 2017, the United Naga Council, the state’s main civil-society bloc, imposed a four-month blockade on vehicle traffic into the neighbouring state of Manipur, for instance, in retaliation against attacks on Nagas there.