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The Financial Interdependence of North and South India


Vigorous growth of technology and the manufacturing industry in some states of southern India has been witnessed. This has popularized the belief that the southern states are supporting northern states financially and their taxes are being used to benefit the poor northern states. The article here is an analysis of the various factors that demonstrate how all Indian states are interdependent and cannot grow in isolation. The diversity of the country is its strength and also the factor that contributes to the independence of the states. For our country to become a global power, it's important that everyone contributes to the economic growth of the country and not their state alone.



In 1947 , India gained independence from British colonial rule. The country was divided into 565 princely states. However, after the concerted efforts of various leaders headed by Sardar Vallabh bhai Patel, the country finally emerged as the Republic of India. The formation of the Indian states was continuously reorganized and was finally divided on linguistic lines. . But today, after 74 years of independence and witnessing various government reforms, the country is believed to be divided into two parts- the developed, prosperous independent south and the poor,dependent north.

This article explains how the parts are dependent and growth of one is interlinked with the other. It is vital that we realize the importance of unity in developing our country to emerge as a superpower.



North vs South India has become more than just a debate today. A major population living in southern states believes that they pay more taxes to the center without getting enough returns. The faster growing population in the north, on the other hand, is being benefited the most, while contributing less. But is it really the case? Is it really possible for southern or northern states to grow financially in isolation without being dependent on each other?

The increasing exchange of tourists, students and employees have made the states interdependent. Being part of the same country, are the citizens really contributing to the economy of the states or of the country?


The economic factors contributing to the interdependence

As a part of the Republic of India, each citizen contributes to the growth of the country and other fellow citizens and not states specifically. Every year, along with GDP, NSDP (net state domestic product) is also calculated to measure the growth of the states. It is important because it helps the central government to decide which state needs special aid and which is prospering. Factors like regional agriculture, travel and tourism, educational institutions, employment opportunities, regional industrialization etc. have contributed in making all the states financially dependent on each other.

Starting with educational tourism through IITs and IIMs. IITs and IIMs get 50% of government educational funds and provide seats to only 3% of the students from all over the country. This institution along with many others use the fees earned and bought by the students in paying the salaries of the staff and ultimately helping the respective states in growing. The Economic Times (2017), says that the IT industry in Bengaluru alone provides employment to over 2 million employees out of a total of 5 million from all over the country. Maharashtra ranks the highest in employment generation , providing around 8 lakh jobs in 2018. Tamil Nadu, on the other hand, ranks 2nd. As new industries and business ventures emerge, talents from all the parts of the country get opportunities to explore and grow. This is because now companies and startups not only look for candidates from the top graduate schools but also candidates with the right skills. High networking on social media has made this process easier and cheaper..

Moving to the manufacturing industry, Tamil Nadu, Maharashtra and Gujarat enjoy the most limelight. Tamil Nadu with more than 45,000 industries, Maharashtra with nearly 35,000 and Gujarat with approximately 25,000 industries along with Andhra Pradesh and Karnataka account for 56% of factory jobs in the country. So where do these workers come from? Due to the high literacy rate in these states, factory workers are mostly the migrants from the states with low literacy of Madhya Pradesh, Chhattisgarh, Rajasthan and Orissa, making industrial states dependent on other states for workers.

Tourism is another factor connecting the states.. In 2018, the tourism industry in India generated a revenue of ₹16.91 and supported 42.673 million jobs, as reported by the World Travel and Tourism Council. An average household working for the tourism industry earns an annual income of ₹2,18,450. The interesting fact is that the key strength of the tourism industry is the domestic tourists. The growing disposable income, increasing inclination towards travelling, emergence of new tourist spots and affordable modes of travelling have contributed to this growth. States like Kerala , Andhra Pradesh, Karnataka, Orissa, Gujarat and Punjab have become popular due to the presence of rich cultural heritage, religious monuments and natural exquisiteness, all at one place. People from all over the country visit these places to rejuvenate themselves and also to practice rituals. While talking about recreational and religious tourism, we cannot ignore medical tourism. With the growing medical infrastructure, few cities in India are becoming the medical centers of India, with Chennai leading them. Travelling abroad for medical purposes can be very draining both financially and mentally. Special hospitals and experienced and dedicated staff in the hospitals of Chennai, Bengaluru, Vellore, Mumbai, Ahmedabad and Indore have made it possible for people to get cured within the country. Domestic medical tourism is estimated to contribute around $5 billion by the year 2022. The growing domestic tourism industry has a major role in the economic booming of these states. Some of the states and Union territories’ economies are majorly based on the travel industry. These include the seven sisters, Goa, Andaman and Nicobar, Uttarakhand etc. So, a North Indian, by visiting the places in the south, contributes to their economic growth and vice versa when someone from south visits North, ultimately making both the parts dependent.

Last but not least, agriculture. India is highly fertile and is home to various seasons and therefore various crops, fruits and vegetation. The diversity in crop growing patterns of all the states is basically because of the type of soil, water, air, monsoon and habitat. But that doesn’t make the consumption of the agricultural products limited to the respective state. As a country with diverse food habits and demands, interstate exports and imports help in fulfilling the same. The apples grown in Himachal Pradesh and the Mangoes grown in Maharashtra are enjoyed in all households throughout the country. According to the Indian Journal of Agriculture, rice consumption is highest in Andhra Pradesh and Assam with almost 10 kg consumption per month by an individual. Though the states have decent rice production, the excess demand is fulfilled by the states of West Bengal and Uttar Pradesh, the largest producers of rice.

This dependence remains same for Wheat, Jowar, regional specific fruits like Orange – Maharashtra, Pineapple – Kerala , Kesar – Gujarat, Litchi – Assam and the list goes on. The difference in intra state demand and supply has led to export and import of these products. The list of factors leading to inter-state dependency doesn’t stop here. It goes on with artifacts, wearables, nature, scientific research, etc.

The growth of IT and biotechnology, power, manufacturing industry etc. in the southern states has been made possible because of the skilled and talented human resources provided by the northern states. Religious, recreational and medical tourism of various states recorded a growth majorly because of the domestic tourism from the sides. Surplus agricultural products from both the ends are exported, facilitating economic growth of the states. As a developing country, it is impossible for India to grow in isolation when divided into parts. It is high time we realize that our work is not only helping our state but also the entire country to flourish. We are responsible for the economic growth of each and every citizen of our country irrespective of their state. Therefore, rather than thinking that the taxes we pay are being used for poor states and not ours, we should contemplate that the taxes we pay are now contributing to the economic growth of the nation.



The reforms of the 1990s had a great impact on the growth of the Indian economy, but there’s no denying the fact that the southern states grew faster.. The development of IT and Biotechnology, banking infrastructure, power and social progress in these states set an example of the success of the initiatives of the state governments and the equal support from the citizens as well. That being said, we cannot ignore the contribution of the northern states in this growth. From providing employees, students to tourists all the states are interdependent and connected. The diverse soil type, monsoon, winds etc. are the additional factors in making no state self sufficient in all the aspects. Therefore, economically, all the states in the country are dependent on each other.

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