Two states: a comparative analysis of Gujarat and Bihar’s growth performance between 1981–2011

We examine the growth performance of two states, Gujarat and Bihar, whose economic turnaround under the leadership of Narendra Modi and Nitish Kumar has received a lot of attention in the run up to the recently concluded national elections. We study if there are trend breaks in the growth rates in Gujarat and Bihar relative to the national average after these respective leaders came to power. We decompose the growth rates in these two states by sector, namely, agriculture, industry, and services, and try to ascertain where any potential growth spurt may have come from. We also look at the evidence on trend breaks in growth of real wages in these states relative to the national average as a first step to understand how growth may or may not have trickled down to the poorer sections.