March 14, 2017

A More Perfect Union

In this Livemint Article, Vivek Dehejia, Senior Resident Fellow at IDFC Institute, discusses the increasing disparity in economic divergence among the states of India, drawing parallels with the situation in antebellum US that had led to the US Civil War.



"Economic disparity between wealthy states of the south and west and poor states of the north and east is skyrocketing. With diverging economic outcomes may follow the desire for state-specific economic policies. With the imminent advent of the GST, a large element of states’ fiscal autonomy, protected under the Indian Constitution, will be voluntarily ceded by states to the Union...


The hope is that by knitting India together into a single market, the GST will help lift all boats, and thus stem the tide of widening regional disparity. Yet the very opposite could happen, with agglomeration economies driving investment to the already prosperous peninsula and leaving the hinterland even further behind. It cost the US a bloody civil war to bind together by main force the bonds of a fraying union. Now, there’s a cautionary tale."


Read the full article here on the consequences of growing economic divergence between the Indian states, authored by Vivek Dehejia

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