Why The Economist's analysis of North-South economic schism is frivolous rather than factual

On leap year’s leap day, The Economist published an analysis that can’t be leapt. With two articles titled “To see India’s Future, go south” and “India’s north-south divide”, The Economist argues that India’s economic rise is over-reliant on South India and Prime Minister Narendra Modi is trading ideological aims for national unity.

Similar arguments have been utilised by a parliamentarian from a major political party to demand a separate nation. This party had organised a movement in New Delhi in February, demanding ‘Our Tax Money, Give it to us.’ It is being portrayed that the ruling party in the Centre stands for an illiterate, underdeveloped, Hindi-speaking North India, while the opposition stands for a developed, inclusive, and Hindi-opposing South India. This portrayal oversimplifies the complexities of Indian politics and regional dynamics, necessitating clarification to challenge attempts to undermine India’s sovereignty.

First things first. The protests against the alleged divide are not economic but political. The analysis of the economy notably excludes the Western states of Gujarat and Maharashtra, which collectively contribute to almost 24 per cent of India’s GDP. However, a strong demand for separatism still doesn’t exist. Among these states, Gujarat has been ruled by the BJP for nearly three decades. The Economist, not for once, mentions these states and their stats.

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Political leaders of the opposition in the South are leveraging economic injustice to solidify their political positions, often in response to challenges posed by Prime Minister Modi’s popularity and his party’s strategies. These leaders also support the farmers’ protests in North India despite their purported concerns about tax distribution. This raises questions about the sincerity of their motives regarding the North-South economic divide.

A historical perspective may shed light on why West and South India have experienced more economic growth than the North and East. From 1952 to 1993, the Government of India implemented a freight equalization policy that subsidized the transportation of minerals. This policy incentivised the development of manufacturing facilities near the coastline, where transportation of raw materials was more feasible. Although the policy was eventually revoked, its impact persisted as new investments favoured regions with existing infrastructure.

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The role of migrants in contributing to GST collections in states like Karnataka, Telangana, and Tamil Nadu is significant. For instance, an IT engineer from Uttar Pradesh settled in Bengaluru contributes to income tax collections, while workers from Bihar purchasing goods in Tamil Nadu contribute to GST revenues. Consider the service they are adding to these states. This commercial activity contributes to state-wise tax collections, which are then redistributed by the union government based on developmental needs. If the argument of using Karnataka’s money for UP is made, then the same argument of using Bengaluru’s money for Hassan can also be made and similarly, using the billionaire’s money to uplift the masses. If the last two would be illogical, then the former would be too.

As long as the tax money collected from the developed states goes to undeveloped states for infrastructure development, security, and education over frivolous subsidies, this distribution is fair. Such distribution will only encourage fresh investment in the underdeveloped regions and the taken-for-granted approach for migrant labourers will be reduced. Naturally, one would prefer to work closer to their hometown, provided enough economic opportunities and other basic amenities. In July 2023, Namma Metro in Bengaluru faced a shortage of skilled labour from the north as Metro works were underway in North and Central India.

The disbursal of the freebies, the corrupted leaders, and the lack of a developmental agenda in some pockets of the north causing a high fiscal deficit, is an issue. Yet, the flagbearer politicians from South India are comfortable in allying with politicians of North India who distribute freebies, revive old pension schemes, and cause severe financial liabilities. Punjab, ruled by the AAP that offered free electricity, didn’t have money to pay salaries to the government employees, and its power corporation had an outstanding debt worth 12,000 crores as of October 2023. Ironically, The Economist clubs Punjab with Uttar Pradesh and Haryana as if it is a BJP-ruled state!

In conclusion, the North-South divide in India’s economic and political landscape is a complex issue that needs nuance and understanding rather than oversimplification and stereotypes.

The reviewer is an independent columnist who writes on international relations, and socio-political affairs. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.