While the national GDP grew at 8.7% between 2005 and 2010, the combined growth rate of the four southern states was merely 7.85%, with Karnataka leading at 8.7%, Kerala 8.1%, Andhra Pradesh and Tamil Nadu at 7.4% each.
With politics taking centre-stage in four south Indian states — Karnataka, Andhra Pradesh, Tamil Nadu and Kerala — their combined gross domestic product (GDP) over the last five years has fallen below the national average, according to a McKinsey survey report, commissioned by the Confederation of Indian Industry (CII) in Bangalore on Saturday.
While the national GDP grew at 8.7% between 2005 and 2010, the combined growth rate of the four southern states was merely 7.85%, with Karnataka leading at 8.7%, Kerala 8.1%, Andhra Pradesh and Tamil Nadu at 7.4% each.
North Indian states like Bihar and Uttarakhand, which had for long borne the tag of backward states, have also overtaken the southern states.
The last three years have seen the two states grow at a furious pace of 16% and 14% respectively, albeit on a lower base. Other states ahead of the southern states are Gujarat at 11.3% and Haryana at 11%. Bihar’s GDP growth rate for the last five years at 9.6% is also higher.
Dissecting the dismal performance of southern states at the CII-southern region annual conference on ‘The Next Wave of Growth—South India,’ Ananth Narayanan, partner, McKinsey said: “Industry leaders attribute several factors to the recent slump in south India’s growth. These are the rising land prices, labour shortage, infrastructural bottlenecks, including port capacity and growing urban congestion in Bangalore, Chennai and Hyderabad and concerted efforts of other states in attracting investments in recent years.”
But all is not lost just yet. Despite the slackening pace of growth rate, South India can still bounce back with a vengeance, as it has done in the past. The fact that South India continues to be among the top 10 contributors to the GDP nationally would help.
As per the report, Andhra Pradesh, Karnataka, Kerala, Puducherry and Tamil Nadu contribute 22% of the national GDP and generate 28% of the national employment.
The region’s current GDP at $300 billion, places it just outside of the top 30 economies of the world, but the report predicts South India could spearhead the country’s growth over the next few years with its GDP projected to hit $500 billion by 2016 and close to $650 billion by 2020.
The region’s growth in skill-intensive industries like automotive manufacturing and information technology and information technology-enabled services (IT& ITES) has also outpaced the all-India average.
“We aspire to get the lower income earners into the medium to higher income levels bracket within the next 20-25 years. For this, our main challenge will be how we plan our growth,” said Hari Bhartia, president, CII.
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