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While it is well known that the eastern states of India have been lagging behind the rest of the country for decades, it is less appreciated that these states have been reinventing themselves in recent years.
Orissa, Chhattisgarh and Jharkhand have returned growth rates higher than the national rate since 2000-01 and, ironically, the global slowdown may in all probability benefit this region by raising its relative importance in the country.
The eastern states comprising Bihar, Jharkhand, West Bengal, Orissa and Chhattisgarh have economies that are still making the transition away from the primary sector.
They are now all set to reap rich dividends in the current scenario, where domestic markets are being relooked at as sources of growth, agriculture is on the verge of a technological revolution and India’s export-dominated centres are no longer as attractive to investors.
With the National Rural Employment Guarantee Act implemented in the last couple of years and higher agricultural prices, eastern India’s predominantly rural economy has benefited. Construction is another booming sector as various infrastructure projects are being undertaken; in fact, Bihar has reported a phenomenal average annual growth of 46% in construction over the period 2004-05 to 2006-07.
Moreover, with the government stimulus packages aiming at increasing infrastructure investment, demand for steel, cement and heavy engineering will increase, and these production units are largely in the eastern region.
One force that favours eastern India in the long term is human capital/workforce.