Inter-State rivalry that is fuelling India’s growth

Inter-State rivalry that is fuelling India’s growth

Credits : The Hindu Newspaper Editorials

What the Editorial Is About

The editorial discusses how Google choosing Andhra Pradesh for its biggest AI data centre outside California has sparked a friendly rivalry among States.

It uses this moment to show how India has shifted from the old Delhi-controlled system of investment to a new era where States actively compete to attract industries.

This State-level competition, the editorial argues, is healthy and is strengthening India’s overall economic growth.

2. Issues Highlighted (Point-to-Point)

• Old centralised system: Before 1991, decisions on industries were made in Delhi; States had little freedom.

  
  

• Slow response after reforms: States took decades to adapt to a more competitive, open economy.

  
  

• Risk of unhealthy competition: In trying to outbid each other, States may offer excessive subsidies or free land, hurting their finances.

  
  

• Uneven capability among States: Some States have strong governance and infrastructure; others lag behind, widening regional gaps.

  
  

• Danger of “race to the bottom”: Competing purely through concessions rather than long-term competence can backfire.

  
  

• Need for more predictable policies: Investors want stability, fast clearances, and skilled labour; not all States offer this consistently.

  
  

3. What Can Be Done (Solutions)

• Compete through quality, not giveaways: States should focus on better governance, skilled workforce, reliable power, and clear policies — not just subsidies.

  
  

• Learn from each other: Successful reforms like single-window systems, EV policies, and industrial parks should be copied across States.

  
  

• Build stronger institutions: Faster approvals, stable regulations, and transparent land policies will attract more investors.

  
  

• Focus on long-term sectors: Invest in education, logistics, R&D, and high-skill industries to build durable economic strength.

  
  

• Healthy cooperative federalism: The Centre should continue ranking States (ease of doing business, exports, startups) to motivate positive competition.