In the rankings of major Indian states based on per capita income, UP and Bihar have been occupying the last two places for quite a while. Their per capita incomes are approximately half and one third of the national average, which has sparked considerable discussion lately. While most people focus on usual suspects like overpopulation and corruption, some argue that the absence of coastlines also plays a significant role. This idea has appeared in this blog several times, and I will offer my two cents.
On the surface, the argument seems reasonable, given that both Bihar and UP are non-coastal states and many coastal states are doing extremely well. However, a closer look reveals a lack of empirical evidence to support this claim. To begin with, the correlation between higher per capita income and having a coastline is relatively new. Back in 1990, of the eight major coastal states, only Maharashtra was performing exceptionally well. Gujarat was above average, while Karnataka, Kerala, Tamil Nadu, Andhra Pradesh, and Bengal were either average or slightly below. Orissa, on the other hand, was quite poor. This suggests that it was economic liberalization, rather than the mere presence of coastlines, that primarily fueled the growth in South India.
The correlation between coastal status and economic performance appears even more spurious when we examine other non-coastal states. There are eight large non-coastal states with populations exceeding 20 million, excluding UP and Bihar. Their combined per capita income is almost same as the national average. In fact, two of these states, Telangana and Haryana, rank among the top three. If being landlocked is indeed such a significant disadvantage, why doesn’t it similarly impact these other non-coastal states?
Let’s explore the coastline related industries further. India’s blue economy, which includes sectors like coastal tourism, fisheries, shipping, and offshore energy, constitutes only about 4 percent of the country’s GDP. Given that coastal states account for 55 percent of India’s GDP, it’s evident that coastlines aren’t as impactful economically as one might assume. The transport sector in India represents roughly 5 percent of the GDP, but a significant part of this involves passenger and local freight transport. The part consisting of transport between port and non-coastal states is relatively small, and the extra burden is equivalent to a tax of less than 5 percent on all imported or exported goods.
So one could probably argue that if UP and Bihar were coastal, their per capita incomes might be 5-10 percent higher. However, this doesn’t change the big picture.
>two of these states, Telangana and Haryana, rank among the top three. If being landlocked is indeed such a significant disadvantage, why doesn’t it similarly impact these other non-coastal states?
Both of these have an urban economic heart pumping up the numbers. In Haryana’s case, its the national capital. In Telangana’s case, its inheriting Hyderabad – the capital of a hitherto coastal Andhra Pradesh.
Difficult but not impossible for land-locked states to build up an urban center, but navigable waterways seem to strongly co-relate, no?
Don’t have a strong view on your broader point but Haryana does well because it’s a small state with high capital formation from fertile agricultural land which benefitted disproportionately from the NCR region precisely because it is small. To wit, it Western UP is carved out as a state, it wouldn’t be surprising if it is has high economic vibrancy. Proximity to national capital has its own advantages.
Similarly hyderabad benefitted from being the capital of a coastal state. It is the coastal elites who built hyderabad (one of the grievances of Telangana movement was domination by coastal elites). And Telengana again is a relatively small state which benefits from a large urban centre with high-value IT sector