Regional Disparities Among States in India

A report in the Economic and Political Weekly in the month of September, 2016 indicated that there has been a growing regional disparity among states in terms of development. The study had been conducted in 19 states. The report says that the six best performing states are Gujarat, Tamil Nadu, Andhra Pradesh, Kerala and Punjab. The six worst performing states are Odisha, Jharkhand, UP and Bihar. The states were evaluated in terms of five sets of criteria: infrastructure, social services, fiscal performance, justice, law and order and quality of legislature. The two main development clusters were then analyzed to analyze the level of development. These were quality service delivery and high per capita income. While it is clear that few states are much ahead of few other states, a pattern is also visible in this. The states performing well are located in the south and west of India but the poor performing states are mainly concentrated in the eastern region. These were only economic parameters. The other social parameters include

This is a very serious issue because the overall development of the country will face a slump if there is such a huge regional disparity in development. So, it needs to be addressed immediately. The causes of such disparity need to be studied before addressing the problem.

Causes of Regional Disparity

Historical causes

The problem of regional imbalance can be traced to the British period. The British government brought about only those developments that were essential for them to have control over India. For example, certain metropolitan cities like Calcutta, Mumbai and Chennai were developed as these were port cities. The main states developed were West Bengal and Maharashtra as most of the industries were concentrated in these states. In the other states, only exploitation of the natural resources and that of the poors were carried out sans any investment for their development. As a result of this, some states inherited much more in terms of investment in transport and communication facilities, irrigation, urbanization etc., covering almost all parameters of development. Other states had to struggle to first uplift their people and then concentrate on development.

Geographical causes

While some states have a better position in terms of geographical location, mineral and other natural resources, the others are lagging behind in these aspects. For example, the states located in difficult terrains surrounded by hills, rivers and dense forests like the states of Himachal Pradesh, Uttarakhand, several north-eastern states are much behind than the other regions having better mineral and other resources and access to markets.

This has an impact on the government’s decision of locating industries and projects which contribute by increasing employment and other advantages for the residents there.

Economical backwardness

While some states due to their access to market and infrastructural facilities have been able to progress and develop, the others have remained economically backward.

Failure of Planning Mechanism

Since the Second Five Year Plan India has been aiming to achieve balanced economic growth. But it has always failed to achieve this objective due to failure of devolution of funds efficiently. From First Plan to the Seventh Plan, Punjab and Haryana have received the highest per capita plan outlay, all along. The other three states like Gujarat, Maharashtra and Madhya Pradesh have also received larger allocation of plan outlays in almost all the five year plans. On the other hand, the backward states like Bihar, Assam, Orissa, Uttar Pradesh and Rajasthan have been receiving the smallest allocation of per capita plan outlay in almost all the plans.  Thus the disparity between developed and less developed states remained a problem.

Political Instability

Political Instability is also one of the factors that has contributed to a great extent in the growing disparity between states. It is a known fact that development of a state is a reflection of good governance. So, the opposite also holds true. Some states due to historical, economic or social causes face greater instability in the form of unstable government, law and order problem, insurgency etc.

Ways to tackle these Disparities

Role of Finance Commission

Under Article 280 of the Constitution of India, the Finance Commission of India is given the responsibility to review the share of funds collected by the Centre to be given to every state. It also has the duty to conclude at a principle or formula that determines the proportion of allocation of funds to the states.

There are certain flaws in the mechanisms adopted for allocation like based on population and per capita income. So, the states with larger population but lower per capita income got preference over others. These are mostly the states already in the phase of development. Less backward states having comparatively lower population still do not receive the requisite attention.  The gap between revenue receipts and revenue expenditures is another criterion. This method has also failed as it automatically results in allocation of resources to already developing states.

Thus, the Finance Commission now needs to revise its formulae and methodology to achieve an overall development in the country, shifting its focus more to backward states.

Increased focus on Geographically backward areas

The fact cannot be ignored that even in geographically isolated states there are certain natural resources which are available in abundance. Taking for example, the hilly regions of North India. They are rich in production of fruits. So, the horticulture industry can be promoted there to ensure greater employment and greater income from the industry. At present, they are largely marked by use of traditional technology. Some use of new but environment friendly technology to boost production as well as adoption of means to boost trade can be some of the measures to be considered. Moreover, due to the scenic beauty and scope for adventure sports, these regions attract a lot of tourists. So, the tourism industry can be promoted in these regions. Enhancing credit availability like setting up Rural Development Banks and increasing incentives like tax concession, transport subsidy schemes can also be useful.

Good Governance

The backward states also need to take some initiative by working on the quality of governance. This can be done through effective planning, management and monitoring of activities. Corruption is one of the main reasons behind bad governance. So transparency in the system needs to be increased so that progress can be made at par with developed states.

Conclusion

For a developing country like India, growing through regional disparities is not an option. If some progress is made in one aspect, it is nullified by the backwardness in other aspects. Further, India also has a very poor status in Inclusive Development Index. The first and foremost way to improve its status is by removing regional disparities which are very glaring. If positive efforts are taken in this regard, the regional disparities can be done away with.