Eco Survey: Income, Health, and Fertility: Convergence Puzzles

ECONOMIC SURVEY 2017 CHAPTERWISE ANALSIS

Income, Health, and Fertility: Convergence Puzzles

This chapter of economic survey is focussed on comparison of Indian states on three grounds – Income, Health & Fertility. Interstate disparities still persist in India and the pace of covergence is worrying is some cases. The chapter begins with following quote by Pt. Nehru:

“… real development cannot ultimately take place in one corner of India while the other is neglected.”
– Pandit Jawaharlal Nehru

IMPORTANT TERMS

Life expectancy at birth (LE) indicates the number of years a newborn would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its life.

Infant mortality rate (IMR) is defined as the number of infants dying before reaching one year of age, per 1,000 live births in a given year.

Total fertility rate (TFR) is defined as the number of children that would be born to a woman if she were to live to the end of her childbearing years and bear children in accordance with age-specific fertility rates in a given year.

Convergence means that a state that starts off at low performance levels on an outcome of importance, say the level of
income or consumption, should see faster growth on that outcome over time, improving its performance so that it catches up with states which had better starting points.

INTRODUCTION

In this chapter, we focus on two broad economic indicators—income and consumption—and three indicators of health and demographic outcomes—life expectancy, infant mortality rate and total fertility rate. We report three major findings.

Finding 1: Income/Consumption Divergence Within India

HOW THE WORLD FARES? Poorer countries are catching up with richer countries, the poorer Chinese provinces are
catching up with the richer ones,

INDIAN SITUATION? In India, the less developed states are not catching up; instead they are, on average, falling behind
the richer states. There continues to be divergence within India or an aggravation of regional inequality.

A similar exercise for consumption was conducted.The same pattern of divergence appears to hold.

Within India, where borders are porous, convergence has failed whereas in China, we observe successful convergence. Even across countries where borders are much thicker (because of restrictions on trade, capital and labor) the convergence dynamic has occurred.

UNDERLYING REASONS:

One possible hypothesis is that convergence fails to occur due to governance or institutional traps.

Another reason may be that India, unlike most growth successes in Asia, has relied on growth of skill-intensive sectors rather than low-skill ones. states. Unless the less developed regions are able to generate skills, (in addition to providing good governance) convergence may not occur.

Finding 2: Health Convergence within India with Room for Improvement Against International Standard

On both indicators of health (life expectancy at birth and infant mortality rate) , there is strong evidence of convergence within India.

How does this progress compare on a global scale?

In Life Expectancy, the Indian states are making slower progress than the average country.

The interpretation is the opposite for IMR. Nearly all the Indian states have posted larger declines in the IMR than the average country.

Finding 3: Fertility: Exceptional Performance

First, 12 Indian states out of the reporting 23 states have reached levels of fertility that are below the replacement rate
(2.1).

Second, like in the case of LE and IMR but unlike income, there is evidence of strong convergence across the states.

Again, all the Indian states (with the exception of Kerala) are performing much “better” (in the sense of more rapid fertility declines) than countries on average.

Another point of joy is that high TFR states such as Bihar, UP, MP and Rajasthan  are posting much stronger fertility declines than is true of the average country.

These fertility developments have strong implications for the demographic dividend going forward.

CONCLUSION

Despite growing rapidly on average, there is sign of growing regional inequality among the Indian states. This is in sharp contrast to patterns within China and across the world. This trend is particularly puzzling since that the forces of equalization—trade in goods and movement of people—are stronger within India than they are across countries, and they are getting stronger over time. This raises the possibility that governance traps are impeding equalization within India.

In contrast, health outcomes are converging within India.

To check out MCQs based on Economic Survey 2017, use the following Links:

  1. MCQs based on Economic Survey 2017 (Part I)
  2. MCQs based on Economic Survey 2017 – (Part II)

To check out Multiple Choice Questions (MCQs) on Union Budget, click on the following links:

  1. MCQs BASED ON UNION BUDGET- CONCEPTUAL FRAMEWORK
  2. MCQs BASED ON UNION BUDGET 2017-18 – BUDGET TRENDS & INSIGHTS
  3. MCQs BASED ON UNION BUDGET 2017-18 – ABBREVIATIONS & JAGRONS
  4. MCQs BASED ON UNION BUDGET 2017-18 – BUDGETARY REFORMS, CHALLENGES & ROAD AHEAD
  5. MCQs BASED ON UNION BUDGET 2017-18 – BROAD THEMES

Do make sure to revise the Basics of Union Budget & Key Features of Union Budget 2017. If you have not already done, you can follow these links:

  1. Budget 2017 at a Glance
  2. Highlights of Union Budget 2017
  3. UNION BUDGET

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