'Peninsular Indians could ask 'Why should we contribute half of India's tax revenues if we account for only a quarter of the seats in the Lok Sabha?'.'
'The rest of the country seems likely to counter that 'democracy means one vote per person irrespective of where that person resides in India'.'
'With no easy answers to this thorny debate, the south's economic ascendancy could end up creating a Hobson's choice.'
A revealing excerpt from Nandita Rajhansa and Saurabh Mukherjea's book, Behold the Leviathan: The Unusual Rise of Modern India.
A decade ago, the corresponding 'South vs Rest' gap was 35 per cent (see exhibit below). To be more specific, in terms of per capita income, Telangana tops the list, at over Rs 3.1 lakh ($4K) per annum.
Exhibit 6.1: Average Per Capita Income of the Southern States is Zooming Past The Rest of India's
Source: Ministry of Statistical and Programme Implementation (MOSPI)
The south, which has always been at the vanguard of India's social and economic progress, is increasingly racing far ahead of the rest of the country.
There are three dimensions along which the south is becoming a more powerful economy than the rest of India:
Per Capita Income in the seven southern states has grown at an incredible average 10 per cent CAGR over FY14-22 to now reach approximately Rs 2.7 lakh ($3,300). The corresponding figure for the rest of India is 8 per cent.
A 2 percentage-point differential in income growth means that from being 35 per cent richer than the rest of the country in FY14, the seven southern states are now 50 per cent richer.
More Equal Dispersion of Wealth among the southern states. As they move towards becoming second-world economies (in terms of per capita income), the disparity of wealth between these seven states is narrowing too -- the southern states are becoming more uniformly prosperous.
This can be seen in the exhibit below, which uses the coefficient of variation (standard deviation/average) as a measure of dispersion.
In contrast, the states in the rest of India are becoming more dissimilar as the country continues to grow at a healthy rate overall.
Exhibit 6.2: Disparity in Per Capita Income Among Constituent States is Remarkably More Elevated in the North Than in the South
Source: Ministry of Statistical and Programme Implementation (MOSPI)
Large Clusters Capable of Sustained Economic Development preferred by both Indian and foreign companies.
Such companies naturally prefer to set up operations in parts of the country where skilled labour is readily available, where the transport infrastructure is well established and where the rule of law can be taken for granted.
The south already has several economic clusters where per capita income is above Rs 2.5 lakhs ($3,000) per annum -- Goa, Karnataka (specifically, the area around Bengaluru), Tamil Nadu (specifically, the areas around Chennai, Hosur and Coimbatore), Telangana (specifically, the area around Hyderabad).
The north, in contrast, just has Delhi (more generally, the National Capital Region spanning Gurgaon and Manesar in Haryana and Noida in Uttar Pradesh) and Gujarat, where per capita income is above Rs 2.5 lakh ($3,000).
With the south already having more economic clusters, both Indian and foreign companies prefer to set up their new Indian operations in the south.
In the north, barring the National Capital Region and Gujarat, one rarely hears about new operations being set up.
The result of this can be seen in exhibit below -- a booming southern state like Telangana has more than doubled its per capita income in the past six years.
Exhibit 6.3: Growth in Per Capita Income in Telangana Far Outstrips That of UP
Source: Marcellus Investment Managers using data from Ministry of Statistical and Programme Implementation
Why has the south surged ahead of the rest of India?
Based on our travels across India over the past fifteen years, south India comes across as a higher-trust society than the rest of the country.
Part of the reason for this seems to be that major conflicts around caste seem to have already played out in south India by the 1960s.
While the caste system still likely prevails in south India, it isn't an all-encompassing feature of daily business life.
In contrast, both in our lived experience and according to sociologists, barring the National Capital Region, caste and upper-caste dominance still seem to be central to daily business life in north India.
Besides education and affirmative action, the factor that has contributed to a considerable 'democratization of capital' in the South is the absence of stranglehold over business by traditional mercantile and banking communities.
Not that they did not exist; but the Chettiars and Komatis were nowhere as overbearing in the money and commodity markets as the ubiquitous northern Bania.
One specific manifestation of south India being a higher-trust society than the rest of the country is that on average, across the seven southern states, the rate of murder per lakh of population is 1.9, whereas the average for India as a whole is 2.8.
The networking of India and the advent of GST has, if anything, hastened the pace at which the south is pulling away from and ahead of the rest of the country, because:
• Pre-GST firms had some tax incentives to locate in tax-exempt northern states like Himachal Pradesh and Uttarakhand. Now these tax incentives are no longer relevant.
• When India's road and telephone infrastructure was rickety, firms got incentives to locate their factories closer to their customers. The pre-GST indirect tax system also encouraged this.
In the post-GST world, with high-quality highways rippling across the land, firms now locate factories where they have access to skilled labour and where law-and-order issues are not present. That swings the balance in favour of south India.
Effectively, the south is now India's domestic equivalent of an efficient east Asian economy, and the rest of India is increasingly going to 'import' what it needs from the south.
Ironically, the south's enhanced economic potency seems likely to interplay with a historic political decision taken in 1971 to create a thorny problem in the years to come.
The Looming Spectre of 'Delimitation'
Delimitation means the process of fixing the number of seats and boundaries of territorial constituencies in each State for the Lok Sabha.
The Constitution says that the number of seats in the Lok Sabha as well as its division into territorial constituencies shall be readjusted after each Census.
This 'delimitation process' is performed by the 'Delimitation Commission' that is set up under an act of Parliament. Such exercises were carried out after the 1951, 1961 and 1971 Census.
As explained by The Hindu newspaper: 'The number of seats in the Lok Sabha based on the 1951, 1961 and 1971 Census was fixed at 494, 522 and 543, when the population was 36, 44 and 55 crores respectively. This broadly translates to an average population of 7.3, 8.4 and 10.1 lakh per seat respectively.'
However, the number of Lok Sabha seats has been frozen as per the 1971 Census. This was done through the Forty-Second Amendment Act until 2000 and was extended by the 84th Amendment Act until 2026. Hence, the population based on which the number of seats is allocated refers to the population as per the 1971 Census. This number will be re-adjusted based on the first Census after 2026.
In the normal course of events, the delimitation process for the number of seats and boundaries of territorial constituencies would have happened based on the Census of 2031 as it would have been the first Census after 2026.
However, with the 2021 Census now being postponed and 2026 nearing, there have been discussions about the impending delimitation exercise.
Currently, the peninsular states account for a third of the seats in the Lok Sabha (179 of the total 543 seats) although these states, as has been discussed earlier, account for half of India's GDP and thus contribute half of the Indian Exchequer's revenues.
If after the delimitation exercise is carried out, the peninsular states' seat share in the Lok Sabha drops to, say, a quarter, it is likely to trigger protest.
Peninsular Indians could ask 'Why should we contribute half of India's tax revenues if we account for only a quarter of the seats in the Lok Sabha?'.
The rest of the country seems likely to counter that 'democracy means one vote per person irrespective of where that person resides in India'. With no easy answers to this thorny debate, the south's economic ascendancy could end up creating a Hobson's choice.
Peninsular India's per capita income has grown at an average 10 per cent CAGR between FY14 and FY22. These states, which account for 30 per cent of India's population and 45 per cent of India's GDP, now have an average per capita income of around Rs 2.7 lakh ($3,300), 50 per cent higher than that of the rest of India's.
As peninsular India pulls away economically from the rest of the country, we see rising fortunes of booming states like Maharashtra, Karnataka, Telangana and Tamil Nadu creating a Hobson's choice for India as the nation nears the delimitation exercise in 2026.
Excerpted from Behold the Leviathan: The Unusual Rise of Modern India by Nandita Rajhansa and Saurabh Mukherjea, with the kind permission from the publishers Penguin Random House India.
Feature Presentation: Rajesh Alva/Rediff.com
© 2025