As posited in growth theory, this convergence trend is not unique and usually applies to regions that typically begin with low-performance levels on an important outcome such as gross domestic product (GDP) or GDP per capita.
The global literature on convergence theory suggests that these regions should experience quicker growth on that outcome over time, helping catch up with regions that began with higher starting points. Beta convergence is a form of convergence that suggests that poorer regions are growing faster than richer ones.
However, when we look at Indian states, especially those in the eastern region, we find that despite their vast mineral wealth and strategic locational advantages, they remain economically underdeveloped compared to other regions.
This demands immediate attention. It further underscores the urgent need for decisive state government intervention to stimulate economic growth in the lagging region.
In 2022–23, the combined GDP of the eastern region was about $579 billion in exchange rate terms, compared to $185 billion in 2011–12. The region’s share has remained unchanged at about 17%.
However, as the country moves toward becoming a developed economy by 2047, which translates to around $30 trillion of GDP if it grows annually by around 9.6% nominally, it becomes imperative to examine what this region’s growth will be and the significant role it can play in India’s economic future.
Looking ahead to 2047, if the region grows every year at 9% and its share in India’s GDP remains unchanged at 17%, its output could reach around $5 trillion. This growth potential, if realized, could be a game-changer in India’s journey to a developed economy status by 2047.
The eastern region’s growth is not just a possibility but necessity for India’s economic future. However, if the region continues to grow at a more modest rate of 5%, its GDP would only be around $1.8 trillion. This underscores the need for immediate policy changes to align the region’s growth with the national goal.
For the Indian economy to reach its goal of $30 trillion by 2047, the rest of the states in India have to grow at double-digit rates, or the eastern region needs to contribute more. The former seems unattainable given the regional disparities at the state, inter- and intra-district levels.
States are at different stages of development, and prioritising growth without social progress is difficult. Therefore, it becomes imperative for the eastern region to grow around 9%.
Ensuring solid and sustainable growth in this region is challenging, as the combined GDP of the states in the Eastern region has grown at a compounded average rate of about 5.5% in the last 11 years.
The lower social progress rankings for eastern states further underline the critical need for focused development strategies to address performance on socioeconomic indicators.
The Social Progress Index (SPI) assesses the performance of states and Union territories on aspects of social development and ranks them relative to their performance with economic peers. Insights from SPI reveal that no state from the eastern region is among the high tiers of social progress i.e. Tier 1 and Tier 2.
Andhra Pradesh, West Bengal and Odisha rank slightly higher in tiers 4 and 5 of social progress i.e. lower middle and low social progress. Bihar and Jharkhand rank the lowest among all states and UTs. They are in Tier 6 of social progress i.e. very low performance.
The poor performance of the Aspirational Districts on social progress in these states drives this. On further examining the performance of 112 Aspirational Districts, we found that most of the districts of Bihar and Jharkhand are in the bottom 20 districts across the country. These figures underscore persistent socioeconomic challenges in the states, revealing significant disparities with the eastern region.
Moreover, it is also crucial to address the labour market issues in these regions. Most states in the eastern areas had a labour force participation rate (LFPR) for the population aged 15-59 in 2022-23 above 60%, except for Bihar, for which it stood at 50.9%, indicating relatively lower workforce engagement.
However, any assessment of labour market dynamics is incomplete without an examination of the quality of the workforce. According to PLFS data for 2022-23, these states have over 83% of the workforce in the “semi-skilled” category, which indicates that the labour force predominantly possesses a low share of intermediate and high skills, ones that can drive productivity and labour mobilization.
Bridging these gaps is essential to enable these regions to contribute more productively to India’s goal of becoming a developed economy by 2047.
Achieving beta convergence in economic performance and human development is crucial for the eastern regions to realise their potential in a developed Indian economy.
These states are plagued by lower performance in social progress, GDP per capita, the composition of their economy and weaker contribution to the skilled workforce.
These underscore the urgent need for state governments to intensify their efforts to address regional disparities, particularly in states like Bihar and Jharkhand, thereby reduce inequities and foster shared prosperity across the eastern part of the country.