New data tools can help analyse pixel-level economic dynamics

livemint.com:

India was internally reorganized when the system of linguistic states was created in the first two decades after Independence. B.R. Ambedkar gave a succinct summary of the underlying principles: every state would have one dominant language, but every linguistic group need not be consolidated into a single state, which is why there are multiple Hindi-speaking states or why we have two Telugu states today.

Few will today remember that the official States Reorganization Committee had even considered the possibility of redrawing state boundaries based on natural economic regions rather than geographical or linguistic attributes. That possibility was eventually rejected—and quite correctly so—because it would be difficult to identify such economic regions, and they would dynamically change as the Indian economy inevitably went through processes of structural transformation. The internal political arrangement should be based on more stable criteria that did not change like an amoeba.

What the States Reorganization Committee said way back in 1955 still holds true. The contours of India’s economic geography have kept changing as the country developed. There are two ways this happens.

First, the economic structure of a particular region changes over time, as old activities go into decline while new activities emerge to replace them. Sometimes entire regions go into decline while others emerge to take over. For example, Mumbai was once an industrial city; it has now become a service economy with a lead in some contemporary opportunities such as data centres and global capability centres set up by multinational corporations.