Why Some States Govern Better Than Others
India's states share the same Constitution, the same Finance Commission devolution formulas, the same central schemes, and the same legal framework. Yet governance outcomes across them diverge dramatically. Kerala's infant mortality rate is approximately 6 per thousand live births; Uttar Pradesh's is approximately 38. Karnataka has attracted semiconductor fabrication by TSMC; neighbouring Andhra Pradesh has struggled to complete its state capital city. Himachal Pradesh has achieved near-universal educational attainment despite being a mountain state without major urban economic agglomerations. Bihar, which receives the largest per-capita Finance Commission devolution of any major state (because its income distance from wealthier states is greatest), has historically produced among India's weakest public service delivery outcomes.
These patterns are the product of political economy choices, historical legacies, and institutional dynamics that systematically differentiate states' governance capacity from one another.
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| Representational Image: Why Some States Govern Better Than Others |
The American Economic Association's Journal of Economic
Perspectives published a synthesis (2020) identifying three key drivers of
India's state capacity variation: under-resourced local governments, the
effects of competitive democratic politics before institutional foundations
were strong ("precocious democracy"), and the persistence of social
hierarchies that undermine merit-based administration.
What You Need to Know
- NITI
Aayog's Health Index has consistently ranked Kerala at the top and Uttar
Pradesh near the bottom among large states; Kerala's governance advantage
in health is not purely fiscal — it spends more efficiently on health than
its income level would predict; UP's underperformance is not purely a
resource problem — it receives substantial Finance Commission transfers.
- IDEAS
for India research found that the quality of IAS officers allocated to a
state cadre — which is partly exogenous to state choices, being determined
by central policy — measurably affects state governance outcomes;
better-quality officer cohorts produce measurably higher own tax revenue
and HDI scores within two to three years of reaching field positions.
- Princeton
University economist Atul Kohli documented in research published through
UNRISD that southern states' superior public sector capacity has
historical roots in the Madras Presidency's tradition of direct British
administrative rule — a colonial legacy that produced more functional
bureaucratic institutions than princely state territories or the Bengal
Presidency's indirect rule pattern.
- Research
on political competition and governance finds that India's states with
more effective political competition — measured as effective number of
parties — show better long-term governance outcomes when competition is
between programmatic parties rather than purely patronage-oriented ones;
Tamil Nadu's pattern of competitive Dravidian politics that has kept both
DMK and AIADMK focused on public goods delivery is a repeatedly cited
example.
- Annual
Reviews of Political Science (2024) research on state capacity found that
state capacity can be "strategically manipulated by political and
economic elites" — powerful interests may deliberately keep
enforcement capacity weak to avoid regulatory compliance costs, creating a
political economy barrier to state capacity building that is independent
of resources.
How It Works in Practice
1. Political coalition structure: States where the
governing coalition requires broad-based public goods to maintain electoral
support — because its voters are diverse and cannot all be individually
rewarded — invest more in public schools, primary healthcare, and rural
infrastructure. Tamil Nadu's competitive Dravidian politics has kept both DMK
and AIADMK focused on universal welfare delivery (free rice, mid-day meals,
free mixers, accessible public hospitals) to maintain cross-caste coalitions.
Bihar's historical politics of caste-specific patronage rewarded governing
coalitions that delivered targeted goods to loyal castes rather than universal
services.
2. Administrative culture and historical path dependence:
State bureaucratic cultures persist across governments. States that inherited
functioning colonial administrative traditions — particularly those under
direct British Presidency rule rather than princely states — tend to have more
professional state civil services that maintain standards across political
cycles. Atul Kohli observed that Tamil Nadu state-level bureaucrats maintained
a professionalism "more akin to the IAS" than prevailing Hindi-heartland
practices — a cultural legacy of the Madras Presidency's administrative
tradition.
3. Political interference in transfers: The frequency
of IAS and state civil service officer transfers is a documented proxy for
political interference in administration. States with very high transfer
frequencies — where officers are moved multiple times per year — produce worse
administrative outcomes because policy continuity collapses and officers learn
that serving political rather than administrative goals is the key to career
survival. States with more secure officer tenure consistently outperform those
where transfers are used as political rewards and punishments.
4. Civil society accountability: States with active
civil society organisations — that monitor public scheme implementation, file
RTI applications, use social audits, and maintain independent media — tend to
produce better governance outcomes than those where civil society is weak or captured.
Kerala's extensive network of mass organisations, cooperatives, and civil
society has historically complemented state government capacity; the absence of
similar civil society accountability mechanisms in many parts of the Hindi belt
has allowed administrative failures to persist without pressure for correction.
5. The improving states: Bihar under Nitish Kumar
(2005–2015) demonstrated that governance can improve substantially within a
decade through deliberate political choices: reducing crime through targeted
policing, investing in roads and basic infrastructure, improving school enrolment,
and reducing corruption in MGNREGA implementation. Bihar's improvement
illustrates that governance quality is not fixed by historical path dependence
— it can change when political leadership chooses to invest in state capacity.
But it also illustrates that improvement is reversible: Bihar's governance
gains have partially eroded since 2015.
What People Often Misunderstand
- Governance
quality is not simply correlated with income: Himachal Pradesh is
poorer than many underperforming states but governs well; Andhra Pradesh
is richer than Kerala but underperforms on many governance metrics; the
relationship between economic development and governance quality runs both
ways, and is mediated by political choices.
- Finance
Commission transfers cannot buy good governance: The Commission can
equalise fiscal resources; it cannot equalise political will to use those
resources for public goods rather than patronage; money is necessary but
not sufficient for good governance.
- South
India does not uniformly outperform North India: Andhra Pradesh has
had serious governance crises (state bifurcation, abandoned capital, power
distribution company defaults); Karnataka has corruption scandals;
performance differences are genuine but within-region variation is also
significant.
- Elite
capture of state capacity is sometimes rational for the elites:
Research finds that powerful industries and landed interests may prefer a
weak regulatory state — one that cannot enforce environmental regulations,
labour standards, or land use laws — and can use their political influence
to prevent state capacity building in these domains; governance weakness
is not always accidental.
- Administrative
improvements from digital technology are real but insufficient:
e-Governance, PFMS fund transfer tracking, DBT (Direct Benefit Transfer),
and GSTN have reduced some forms of leakage and improved accountability;
but technology cannot substitute for political will to hire honest
administrators, secure officer tenure, and maintain functional local
governments.
What Changes Over Time
NITI Aayog's performance indices — releasing annual state rankings on health, education, fiscal health, SDGs, and good governance — create reputational pressure that supplements Finance Commission fiscal incentives with public accountability. The 16th Finance Commission's introduction of performance-based criteria (including tax effort and GDP contribution) in horizontal devolution creates new fiscal incentives aligned with governance quality.
The three new criminal codes' (BNS, BNSS, BSA)
provisions on FIR registration discipline and investigation quality are
designed to reduce one of the most documented governance failures in state
policing administration across India.
Sources and Further Reading
- AEA
Journal of Economic Perspectives — Why Does the Indian State Both Fail and
Succeed: https://www.aeaweb.org/articles?id=10.1257/jep.34.1.31
- Annual
Reviews of Political Science — Endogenous State Capacity: https://www.annualreviews.org/content/journals/10.1146/annurev-polisci-061621-084709
- IDEAS
for India — Rethinking cadre allocation procedures: https://www.ideasforindia.in/topics/governance/rethinking-cadre-allocation-procedures-in-civil-services
- Atul Kohli — State and Redistributive Development in India: https://www.princeton.edu/~kohli/docs/UNRISD.pdf
- Sociology.Institute — Assessing the Functioning of India's Federal System: https://sociology.institute/india-democracy-development/indias-federal-system-functioning-assessment/