Good Governance and Social polarization amongst Indian States and its Implication

Abstract

Economists agree that governance is one of the critical factors explaining the divergence in performance across regions / countries. Whenever any economy undergoes profound economic changes, it is implicitly presumed that the benefits of economic growth will automatically trickle down to poor and reduce income inequality across regions. As a result positive changes will be reflected in the form of increased employment opportunities, good standard of living and low rate of total economic crime and so on. As observed by the UNDP (1997) report that result of good governance is development that gives priority to poor, advances the cause of women, sustains the environment and creates needed opportunities for employment and other livelihoods. Therefore the phenomena of good governance are usually explained in the form of economic policies in decision making processes that must contribute to reduction in all types of inequalities across regions.On the contrary, studies on economic growth and development highlighted that the major problems of developing countries are unequal income distribution and low growth rate, which affects their welfare aspects. Early works done by Anderson (1964) and Aaron (1967) showed that there was an inverse relationship between growth and income distribution. However, Kaufmann, et al. (1999a, 1999b, 2002) indicated a strong causal relationship running from good governance to an increasing level of per capita income and other social outcomes. Thus we see the concept of good Governance is multifaceted and encompasses different element of the state and the society. Our study shows that throughout the country although there has been an increase in per capita income (measured in terms of net state domestic product NSDP, over the decade (2000-2011) but the differences emerged in terms of increase in total economic crime and employment opportunities. With the help of Lorenz Curve, we have depicted significant inequality between income and total economic crime rate. Similarly, inequality also observed for per capita employment opportunity generation for all Indian states. The coefficient of variation for per capita income and per capita employment opportunity has increased by more than 10 per cent over the decade. Whereas for total economic crime, there has been a fall in coefficient of variation for more than 13 per cent which indicate that there has been consistency in total economic crime. Our study strongly advocates that Indian economic policies fail to translate its impact in the form of good governance because it has increased inequalities across Indian states.Key Words: Polarization, good governance, Economic Crime, NSDP, Lorenz Curve, inequalities