New Delhi, Oct. 30 -- Earlier this month the Institute of Economic Growth and India's ministry of finance hosted the fourth Kautilya Economic Conclave. In my presentation in a session on the state of state finances, I addressed the question of how to accelerate development in states that are lagging behind.

I first classified 20 states that account for the bulk of India's population (and for which relevant data was available) into four broad groups based on their level of economic and social development.

These are a group of 'balanced development states,' with higher than median levels of both economic development and social development; a group of 'growth oriented states' with higher than median levels of economic development but below...