Other big surprises are Andhra Pradesh and Maharashtra. While these states have tremendous opportunities, they have failed to utilise them. Like Tamil Nadu, these states now have per capita investment below the national average.

Both Kerala and West Bengal have suffered from a pro-trade union environment. Both states are doing badly in absolute terms: Kerala is at rank 11 and West Bengal is at rank 12. However, Kerala has actually lost ground compared with the past while West Bengal has improved its rank in the last 5 years.

In 2007, the top state, Haryana, had Rs 78,709 of per capita investment under implementation while the bottom state, Bihar, was at Rs 3,080. The top state was 25 times bigger than the bottom state. This suggests that inequalities will widen. At the same time, traditionally successful states like Karnataka, Andhra Pradesh, Tamil Nadu and Maharashtra are scoring weak ranks. Perhaps, history is not destiny: states with a strong economy are not getting a free ride in attracting investment.

The unfortunate story is Bihar. Despite high hopes of an improved Bihar under Nitish Kumar, the state did not see much improvement in 2007 compared to 2002. Per capita investment rose to Rs 3,145 from Rs 3,080. The surprise is that it had done much better in the previous five years under an RJD government that seemed to be floundering on all fronts. Per capita investment had risen from Rs 959 in 1997 to Rs 3,145 in 2002. The Nitish government clearly needs to do a lot more in terms of actual improvement in the state to attract the investment necessary to propel growth.

... contd.