A BROAD REVIEW OF THE MACRO-ECONOMY

OF JHARKHAND STATE AND IDENTIFICATION

OF KEY ISSUES AFFECTING ITS
DEVELOPMENT

MACROECONOMICS ASSIGNMENT#1 !1
 SECTION#1

WHAT IS MACROECONOMICS?
Macroeconomics is the study of economics involving phenomena that affects an
entire economy, including inflation, unemployment, price levels, economic growth,
economic decline and the relationship between all of these. macroeconomics looks at the
big picture - it analyses the entire economy.

EXECUTIVE SUMMARY OF JHARKHAND

• Mineral-rich state Jharkhand is one of the richest mineral zones in the world. The state
boasts of 40% and 29% of India’s mineral and coal reserves, respectively.
• Second largest iron ore deposits With 25.7% of the total iron ore (hematite) reserves,
Jharkhand ranks second among the states. During 2015-16, the total iron ore (haematite)
reserves in the state were recorded to be 4,596.621 million tonnes.
• Leading producer of minerals in India Jharkhand accounts for 20-25% of the total steel
produced in the country. During 2015-16, the state produced around 20-25% of total steel
produced across the country. The government targets to increase steel production in the state
form 14.9 million tonnes in 2015-16 to 25 million tonnes by 2017-18.
• Sole producer of coking coal, uranium and pyrite Jharkhand is the only state in India to
produce coking coal, uranium & pyrite. The state is also a leading producer of coal, mica,
kyanite & copper.
• Educational institutes Jharkhand has some of the country’s premier engineering colleges,
including Birla Institute of Technology (Ranchi), National Institute of Technology
(Jamshedpur) & Indian School of Mines (Dhanbad) & business colleges such as Xavier
Labor Relations Institute (Jamshedpur) & Indian Institute of Management (Ranchi).
• Largest producer of tussar silk Jharkhand is the largest producer of tussar (a non-mulberry
silk) in India. During 2015-16, the state’s contribution to tussar silk production, across the
country, was 40%.
• Strong growth in tourist arrival Tourist arrivals in the state have increased from 20.45
million in 2012-13 to 33.58 million in 2014-15.

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 PRESENT STATUS OF JHARKHAND:

Though income and per capita income of Jharkhand is low in comparison to rest of
the country, its growth rate is higher than most of them. The per capita income of the State is not only
much less than the all India average but is lesser than most of the states of the country; it is better than
only ve states of the country, namely Bihar, Uttar Pradesh, Madhya Pradesh, Manipur and Assam.
However, its growth rate is not only higher than the all India average, but has been higher than most of
the states and Union Territories of the country. The growth rate of only three of the states of the
country, namely, Gujarat, Mizoram and Tripura, has been better than that of Jharkhand.

JHARKHAND FACT FILE

PARAMETER JHARKHAND
Capital Ranchi
% GROWTH RATE GSDP
Geographical area (sq km) 79,714
14
Administrative districts (No) 24 12
10
Population density (persons per sq km) 414
8
Total population (million) 33.0
6
Male population (million) 16.9 4

16.1
2
Female population (million)
0
Sex ratio (females per 1,000 males) 948 2012-2013 2013-2014 2014-2015 2015-2016

Literacy rate (%) 66.4 % GDP growth india % GSDP growth Jharkhand

Jharkhand Macroeconomics Overview

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 Economic Indicators
1 Net State domestic Product (at factor cost)
2 Gross Domestic Product (at factor cost)
3 Contribution of Agriculture to NSDP/GDP (%)
4 Contribution of Industry to NSDP/GDP (%)
5 Contribution of Services to NSDP/GDP (%)
6 Per Capita Net State Domestic Product (factor cost)
7 NDP Growth rate (%)

1. NET STATE DOMESTIC PRODUCT(NSDP):-

Net State Domestic Product (NSDP)

is defined as a measure, in monetary terms, of the
volume of all goods and services produced within the
boundaries of the State during a given period of time
after deducting the wear and tear or depreciation,
accounted without duplication.

The net state domestic product (NSDP#) of

Jharkhand, during 2015-16, stood at US$ 34.10
billion.
Between 2005-06 and 2015-16, NSDP of the state
grew at a CAGR of 10.96%. Economic Snapshot: NSDP of Jharkhand

2. Gross Domestic State Product (GSDP):-

Gross Domestic State Product (GSDP) is the state

counterpart to a country's gross domestic product
(GDP), the most comprehensive measure of national
economic activity.
The performance of Jharkhand, in the last five years,
has been better than the performance of the country
as a whole.
The GDP of India grew at an average annual rate of
6.8 percent (CAGR), the GSDP of Jharkhand grew
at the average rate of 8.8 percent per annum between
2011-12 and 2015-16.
At current prices, the gross state domestic product
(GSDP*) of Jharkhand, for 2015-16, stood at US$ Economic Snapshot: GSDP of Jharkhand
36.96 billion.

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3.CONTRIBUTION OF AGRICULTURE TO NSDP/GDP (%)

About 80% of the rural population of the state depends on agriculture. Rice is the major
food crop of the state, covering 80% of the cropped area. In 2015- 16, total rice
production in the state stood at 3,456.4 thousand tonnes.

In 2015-16, total production of horticulture crops in the state of Jharkhand stood at 4.18
million tonnes, while the total area under cultivation was 338.2 thousand hectares. During
2015-16, US$ 6.87 million were allocated under National Horticulture Mission for the
development of the horticulture sector in the state.

The state’s soil and climatic conditions also support cultivation of ornamental plants,
mushrooms, spices and tea.

In 2015-16, total production of fruits in Jharkhand stood at 791.5 thousand tonnes and
production of vegetables stood at 4.28 million tonnes.

The pulses produced in the state mainly include arhar, urad, moong, kulthi, bengal gram,
masur and peas. At 0.79 tonnes/hectare, productivity of pulses in Jharkhand exceeds the
national average of 0.75.

4. PER CAPITA INCOME (PCI):-

PCI(per capita income) JHARKHAND Vs INDIA

14 72
12
69.92 70
10
68
8 67.24
66.59
6 66
64.99
4
64
63.53
2
62
0
-2 2011-12 2012-13 2013-14 2014-15 2015-16 60

india jharkhand % contribu<on of PCI

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 The performance of Jharkhand, in the last five years, has been better than the
performance of the country as a whole. While the GDP of India grew at an average
annual rate of 6.8 percent (CAGR), the GSDP of Jharkhand grew at the average rate
of 8.8 percent per annum between 2011-12 and 2015-16.

The growth in per-capita income, both at current and constant prices, has also been
higher in Jharkhand than in India. The per capita income in Jharkhand has increased
by 11.1 percent at current prices and by 7 percent at constant prices, while in India
they have increased by 10.1 at current prices and 5.1 percent at constant prices
between 2011-12 and 2015-16. But, despite the higher rate of growth, the per capita
income of Jharkhand is less than that of all India average.

CONCLUSION ON MACROECONOMICS OF JHARKHAND:

1. Though, the per capita income of Jharkhand is one of the lowest in the Country –
about 30 percent less than the national average and more than only five states of
the country & its growth rate in faster than most of them.
2. Performance of Jharkhand, in last five years has been better than all except the five states
and union territories. Growth in GDP and per capita income, both at current and constant
price, has been higher than India. But even then it will take another 18 years for its per
capita income to become equal to the national average.
3. The service or tertiary sector has remained the most dominant sector of the State
economy in terms of growth rate or in terms of contribution to State’s GSDP.

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 SECTION# 2

THE KEY FACTORS AFFECTING ITS DEVELOPMENT

Jharkhand literally means Bushland or ‘The Land of Forest’. This land, carved out of the
southern part of Bihar on 15 November 2000, with Ranchi as its capital, is truly endowed
with nature’s unlimited bounties and blessings.

Jharkhand is the richest of all states when it comes to mineral wealth. As the repository
of 40 per cent of the nation's minerals, the state has been an instant draw with some of the
biggest names of the corporate world like Tata Steel, Jindal Steel & Power, Essar
spearheading the momentum of industrialisation.

However according to the Associated Chambers of Commerce and Industry of India

(Assocham) Jharkhand has huge potential which has not been tapped so far. Despite
holding 40% of India’s mineral wealth, economic development of the state has not been
sufficient to trickle down to the people in need. The poverty level in Jharkhand, is among
the highest with rural poverty being greater than urban poverty.

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The challenges facing the development of the state can be discussed under the following
heads:

A. EMERGENCE OF A NEW STATE: ADVERSE INITIAL CONDITIONS:

1. Carved out of the state of Bihar in 2000,

Jharkhand was faced with adverse initial
conditions -- low average income, very high
incidence of poverty, and little social development.

Its nominal per capita income (($314 in 2003/04)

was low (only 55 percent of the all-India
average).The average per capita income was also
associated with a high degree of income inequality
and a rural-urban gap within the state as was

evident from the high incidence of poverty

in rural areas. The initial level of rural
poverty, assessed at 49 percent by the
National Sample Survey (NSS) 55th round
in 1999/2000, was the highest among all
India states.This suggests a potential
distributional issue. The divide was sharper
when the rural and urban areas are
compared with urban poverty being only 24
percent.

2. Initial health and education indicators in

Jharkhand were also markedly unfavorable
in comparison to both the all-India average
an

As per the census (2001) figures, the

literacy rate of the state at 54 percent was
the second lowest in the country (after
Bihar) against the national average of 65
percent. The state had the second highest
rate of gender disparity in the country after
Rajasthan.

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B. KEY STRATEGIC CHALLENGES FOR SUSTAINABLE GROWTH:

Despite progress and positive turnarounds in several fields like improvement in access to
primary education accompanied by greater gender and social equity; progress made in some
key health indicators, especially in the area of child vaccination and prevention of major
diseases; a positive and consistent growth rate, Jharkhand remains a state with one of the
highest poverty rates in India. The goal is therefore not only to accelerate growth but also to
ensure that it is socially inclusive and environmentally sustainable. This would involve:

● addressing institutional gaps (building new institutions as well as improving the

performance of existing institutions);

● improving access to infrastructure (such as irrigation, roads, power,

telecommunication, storage facilities, schools and clinics); and

● expanding rural opportunities (creating economic opportunities, as well as equipping

households and community to take advantage of such opportunities)

To achieve the above objectives the following is crucial:

IDENTIFICATION OF THE BOTTLENECKS

1. Lack of able and stable leadership:

● Absence of political stability is surely one huge determinant, as Jharkhand has
seldom been under stable, long-term management. Ever since the state's inception
after Bihar's bifurcation, there have been changes in the Jharkhand leadership a good
many times besides a spell of President’s rule in 2009.

2. Weak institutions rampant corruption and ineffectual administrative policies:

● Weak institutions for implementing anti-poverty programs tend to bypass a large
segment of the needy poor, leading to poor targeting as well as high incidence of
program leakage. All sources indicate that, despite significant investment, only a
small percentage of Below Poverty Line (BPL) families benefit from these
programs.

(The social development index is courtesy the Jharkhand

State report to 14th Finance Commission )

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 • Jharkhand ranked last on the condition of sanitation in rural areas of 26 states in
the National Sample Survey,2016. It was among the top states with a perception of
rising corruption an independent suvey (Deccan Herald,April 2017) .

● Jharkhand is being industrialised at a fast pace and major budgetary provision for
occupational health hazards has to be a priority. Several companies in Chaibasa in
West Singhbhum district have abandoned asbestos and iron ore mines. Jadugoda in
Purbi Singhbhum is a hub of uranium mining but there is no separate monitoring
mechanism to study health and environmental impact.
● Road infrastructure has seen improvement but lags behind in comparison to national
average.Tourism industry also gets affected owing to the poor infrastructure and
connectivity issue of the state.
● The investment made in infrastructure sector needs to increase & sustained for
required socio-economic development.
.
3. Inadequate and Ineffective management of natural resources:
● In a state like Jharkhand with a huge mineral
endowment and large forest cover, the
management and governance of minerals and
the natural environment assumes heightened
importance.
● Minor forest produce in Jharkhand has about 55
items including lac but Tasar Silk is the only
product which has got the attention of the state
resulting in the creation of Jharcraft, a silk
textile and handicraft corporation. But silk
farmers have benefitted little and continue to
remain poor.
● Unscientific mining has not only wreaked havoc
on land but also polluted major rivers in the
state, including Damodar and Subernarekha.
● Closure of worked-up mines in timebound
manner is a matter of concern as it leads to illegal mining, loss to human life, besides
adverse effect on the ecology.
● Access to natural resources in Jharkhand continues to favour elites at the cost of
local inhabitants.In the case of the kendu leaf,the only example of a nationalised
NWFP in Jharkhand,local contractors profit at free market rates at the cost of the
primary collector.
● Logging of timber and fuel wood continue despite being illegal.
● Solving these problems require empowering village assemblies, strengthening
grassroot local institutions and ensuring more inclusive, equitable access to natural
resources.(Case Studies of natural resource access in Jharkhand India: Implications
for democratic decentralization,May2016)

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 4. Land acquisition issue and insecurity relating to extremist violence:

● Jharkhand has had a history of violence because of Naxalism which started with
deprivation and a demand for justice.
● Saranda and Saryu action plans prepared for the overall development of naxal-
affected areas, need to be executed in due earnest.
● Cultural transformations in adivasi society and a growing fear of socio-economic
alienation – are breeding a deep sense of social angst among adivasis against those
they perceive as ‘outsiders’.
● Land acquisition processes and the proposed amendments in the CNT and SPT
acts(Chota Nagpur Tenancy Act and Santhal Paraganas Tenancy Act) have further
fuelled the situation. More than a dozen attacks have been carried out against
prospective investors such as against Bhushan steel surveyors, and recently against
the National Thermal Power Corporation (NTPC) in Oct 2016.
● The fragile and diverse socio-religio-ethinic character of the state coupled with left
wing extremism makes it vulnerable to violent clashes.

5. Low beneficiary participation and satisfaction:

● While Jharkhand is oft-repeated as a

mineral rich state, the tribals are yet to
partake of it. The localities often get
inadequate attention in the rush for
mineral development and end up suffering
in economic, social and environmental
terms.

● Chronic poverty is disproportionately

high among the historically marginalized
groups, especially the tribal population
( livemint, Oct 2014). With the start of
any development project, a large number
of tribal villagers are often displaced from
their locations. The Indian People’s
Tribunal on Environment and Human
Rights reports a total of 6.5 million people being displaced in the name of
development.

● Spatial analysis shows a high concentration of poverty in the mining areas for
example. This suggests that greater development has not necessarily led to lower
deprivation.

● The need of the hour is to combine mineral based industries with labour intensive
industries like textile and garment that can absorb the labour that may be displaced
by mineral based industrialization.

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 6. High level of rural poverty.

● Agroecological and social factors are the

main causes for rural poverty in
Jharkhand. Poor infrastructure, difficult
terrains, high population pressure on
arable land, low coverage of irrigation,
overall low levels of female literacy,
limited in-situ employment opportunities,
natural calamities like drought are some
of the factors that inflict poverty in the
state.
● Statistics compiled by the Food and
Agricultural Organisation (FAO) for
2015-16 shows that the nutritional status
of children under five years is critical and
BMI below normal is most evident in
Bihar and Jharkhand.
● According to the Food Security Atlases for Rural India (by IHD and UN’s WFP),
Bihar and Jharkhand are listed as the most insecure in terms of food and nutritional
security.
● Intervention should involve rural connectivity and small-scale irrigation (e.g. check
dams) and watershed, land reforms like restoration of illegally acquired tribal lands,
design policies of industrialization that do not displace but absorb the poorly
educated local labour.
● Improve female literacy rate and empower women.

7. Need to improve Higher Education Scenario:

● Even 17 years after being carved out of Bihar, Jharkhand's education sector is dire
need of improvement. Of the 81 assembly constituencies, 35 have got no college at
all. In 11 districts there's not a single college for women.
● Jharkhand is one of the poorer states of India where poverty often forces youngsters
to take up menial jobs or to simply migrate to other states. Education can mitigate
the situation, but lack of sufficient infrastructure often nixes that possibility.
● There is a large deficit of national colleges in the state. Against the national average
of 23 Gross Enrolment Ratio (GER), Jharkhand only has13 GER in the state and a,
college population index of 8 viz-a- viz national average of 26. There is a
requirement of 692 colleges to match the national average.
● Another problem that plagues educational institutions in the state is vacant posts of
teachers. There are plans for mass recruitment to ensure the right teacher-student
ratio in higher educational institutions.
● It is also important to focus on demand- and choice-based education which will help
a student's employment prospects.

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