While we were lauding the superlative performance of Indian economy during the recessive times, a silent revolution was happening in Indian states, that too among the poorest of them all.

The states nicknamed BIMARU – Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh – and Orissa have always performed much below the country average and blamed for hampering India’s GDP all these years. The recently released figures for the five-year period from 2004-05 to 2008-09 is nothing less than spectacular. The worst among the lot have performed better than India’s average of 8.45% for the same period.

The five states, now numbering eight due to bifurcation of three of them, have proved that India’s economic development has been inclusive. Bihar, which comes first in this group with an impressive growth rate of 11.03%, was labeled failure and beyond hope by one and all. Its growth almost equals India’s most touted state economy of Gujarat (11.05%).

The accomplishments of others in the group are also every bit as astonishing. Four other states, Uttarakhand (9.31%), Orissa (8.74%), Jharkhand (8.45%) and Chhattisgarh (7.35%), have gone beyond the international benchmark of 7% for miracle economies.

Uttar Pradesh’s 6.29% is not bad, though it falls short of the benchmark. Its vastness, huge population and haunting poverty make the achievement standout.

The amazing turnaround of these economies have proved skeptics wrong, who doubted India’s achievement as a stroke of luck.

There is still much road to travel before the growth benefits the poorest. Corruption, Maoism and terrorism are serious issues to be tackled. The monsoon-dependent agriculture is another concern to be sorted out. Despite this, it is heartening to see that the gaps between states are shrinking.

Demand for separate Telangana state has badly hurt the economy of Andhra Pradesh. Frequent bandhs and violent agitation has affected many industries. Companies have opted for a wait and watch policy before investing in the state. There are instances where the state has lost huge investments as companies have opted for other places for investment. Bharat Forge has opted to open their unit in Gujarat instead of Andhra Pradesh and French car manufacturer Peugeot and steel giant ArcelorMittal has put a hold on their investment proposal. Others on this list included Sri Lankan apparel manufacturer Brandex, the multinational United Health Group, and JP Morgan.

Among different industry, pharmaceuticals and bulk drug manufacturing units have lost over Rs. 500 crore. Since they cater to African markets, the exports have come to a standstill and stocks are piling up in their godowns. Chief Minister Mr.Rosaiah is concerned about the growth of the state and also the consequences of this indefinite agitation which has affected almost the entire population

Drought and floods marred India’s agricultural show this year, which is deflating the jubilation over the commendable performance of Indian economy during 2009.

Last two years saw the agricultural sector scale new heights with record food grain production. However, natural calamities coming one after the other in a short span of three months ensured that this year the show will not even match last year’s, let alone create records. In fact, the drought of 2009 is said to be worse the country has seen since 1972.

The main culprit in the drought fiasco was the south-west monsoon, which skipped its scheduled visit in 316 districts covering 13 states. Government saved the day for the farmer with diesel subsidies and extra electricity to salvage standing crops.

When the sector was heaving a sigh of relief, there came the floods in four of the main food crop-producing states of Andhra Pradesh, Karnataka, Gujarat and Maharashtra.

While the drought dried up the rice and cereals production to the tune of 10 million tonnes, the floods washed away the pulse crops en masse. Not only are the summer crops destroyed, there is going to be a shortfall in winter crops as well. Together, they created a dent in the shining economy, at least to a limited extent.

Though government is maintaining that the calamities will not impact the food security of the country, inflation is soaring at an alarming rate. Government assurance that the 17 million tonne food stock is sufficient to meet any shortage is proving ineffectual in containing inflation.

Experts reckon that with an improved public distribution system in place, the situation is still manageable.

The New Industrial Policy, 1991, opened new vistas for globalisation and the resultant growth of the Indian economy. Soon, Foreign Direct Investments (FDIs) became the major drivers of the industrial growth and capital markets. According to the ‘India FDI Fact Sheet – July 2009’ by the Ministry of Commerce and Industry, the quantum of FDIs increased to USD 35.17 billion in 2008-09 from USD 4.03 billion in 2000-01.

 Mauritius (44%) remains the top investor in India, followed by Singapore (9%), US (8%), and UK (6%). Three most attractive sectors for FDI are financial & non-financial services (23%), computers (10%), and telecommunications (8%). The growth potential and revision of FDI norms for these sectors have led to an influx of investments by foreign entities.

 Analysing the geographical trends, wide disparity is revealed among the states. In the terms of FDI equity inflows, Maharashtra (35.56%) and Delhi-NCR (17.78%) lead the pack. IT, ITES, and financial services hubs Karnataka (6.49%), Gujarat (6.2%), Tamil Nadu (5.36%), and Andhra Pradesh (4.12%) fall much behind. States, like Bihar and UP indicate negligible FDI inflows. Therefore, a lot is left to be desired in the terms of a balanced regional growth in India and the State Governments need to come up with concrete measures for attracting foreign capital in their regions.