Why Indian States will give way to megaregions? (But is it anything new?)

Ashok Malik of TOI has an interesting piece. He says States as a way of political and economic organisation is passe.

India is going to be run by three megaregions in future:

As units of political and economic reckoning, states have come into their own and two recent but different episodes have emphasised this. The passing of the Goods and Services Tax (GST) constitutional amendment and the creation of the GST Council gives states greater authority in fiscal policy than before. On the other hand, the Cauvery dispute between Karnataka and Tamil Nadu has made apparent that strongly regional politics sometimes renders compromise difficult.

Nevertheless, whether as a political challenge or an economic trigger, the salience and empowerment of states is set to rise. There is hope that a sense of competition will get states to push each other in attracting investment and business opportunities, incubating manufacturing and innovation, and growing the overall Indian economy. India is making up for lost time. It is devolving powers to states and provinces in the manner China did in the late 1970s and 1980s, a decade in which Indira Gandhi did everything that was possibly wrong.

Having said that, is a template for the 1980s or 1990s true for the 2020s? Are states already yesterday’s story, and are tomorrow’s units of economic reckoning clusters and megaregions that will inevitably run across state boundaries? Consider some numbers. India’s GDP is today valued at $2 trillion. Amitabh Kant, chief executive of Niti Aayog, says if all goes well it could touch $10 trillion by 2032. A shorter-term assessment would have it reaching $5 trillion in the next decade, by 2025-26.

How will this $5 trillion GDP be distributed? About two-thirds of it will be located in three megaregions. First, the National Capital Region, comprising Delhi, Gurgaon and Noida, but frankly stretching to a variety of other locations: from Jaipur-Ajmer to Meerut to Gwalior.

Second, there is the Mumbai-Pune-Thane belt, extending by way of the National Highway to Ahmedabad and constituting the southern end of the Delhi-Mumbai Industrial Corridor.

Third, there is the 350 km stretch from Chennai to Bengaluru. Linking two states currently divided by the waters of the Cauvery, this stretch is being developed, with Japanese support, as an industrial corridor driven by technology, innovation and high-end, precision manufacture.

It is a reasonable bet, borne out by statistical modelling, that in 10 years each of these three megaregions will individually have a $1 trillion GDP.

He then points how economic megaregions are present in advanced countries as well. Though the example is only one from US but we do get to read such cases in Germany etc as well. Even if we continue with the States, they will just be obsolete:

Economic megaregions exist in every major country. In the American Northeast, for example, the Boston-Washington, DC, corridor (running though New York and Philadelphia) has a GDP about as large as Germany’s. A megaregion is recognition of the fact that business ecosystems and complementarities cannot be curbed by state boundaries and will tend to overwrite political maps. That’s why states as a category are becoming obsolete. India’s future for much of the coming 25 years at least will be shaped in its three emergent megaregions.

This is all fine and could easily happen as well.

The thing is it is hardly anything new. This organisation and reorganisation business keeps happening as we move.

The interesting thing though is how little things have really changed. We have had two of these regions – Bombay and Madras – as the key megaregions during British time as well. Instead of Calcutta which was the political and commercial capital during British time, we have Delhi this time. Post State reorganisation in 1956, we thought differently and made these megaregions part of the States.

But this reorganisation could not really change the fundamental aspects. Their geographies had historically earmarked them for growth and development. It is interesting and important they have continued to remain relevant despite so many years.

What would have been more interesting is emergence of newer megaregions..


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