States began competing with each other soon after liberalisation in the early 1990s. Instead of attracting the attention of New Delhi to invest into industries in their states, the governments of Maharashtra and Gujarat focused on attracting private enterprise. Tamil Nadu followed soon and so did Karnataka. These states have gained a lot in terms of accelerating their economic growth from their initiatives to attract investments.
Agrarian states such as Punjab and Haryana have not been very keen participants in the race to attract private investments. Agriculture has been an area of protection, not competition. Competition has focused a lot less on the quality of life offered to inhabitants of a state. Competition to attract superior human capital, of course, has been completely absent. Its always been about attracting financial capital and not human capital.
We know a little about the migration of low-skilled labour from labour surplus states such as Bihar to Punjab and even Kerala. But, we know little about the migration of high-skilled labour. It would be interesting to measure the migration of high-skilled labour into IT hubs, for example, over the past two decades. It takes the Census office a long time to release migration data. But, when it arrives, it would be interesting to see the movement of human capital across states in the 2000s. This was the period when the IT boom was in full bloom, when Bangalore and Gurgaon became labour magnets and when urbanisation expanded immensely.
Did the so-called success of the Gujarat model lead to greater migration into the state? This is perhaps, the ultimate measure of the success and therefore attractiveness of a state. The best reflection of the success of the American model of growth is its attractiveness as the ultimate destination to the most ambitious people in the world. The question within India is, do the most ambitious people—whether in business or in cultural exposition—feel that Gujarat would be the ultimate destination of residence? Would an ambitious family of small-town India prefer to send their children to Ahmedabad rather than Delhi, Mumbai, Bangalore, Chennai or Hyderabad for a better future?
Delhi and Mumbai were always attractive destinations for human capital and they continue to be so. Kolkata was an attractive destination to the impoverished neighbourhood, but it seems to have lost out following the long rule of the Communist government in the state that wasn’t too kind to private capital. Bangalore,