India's regional disparity and its policy responses

• Date: 01 November 2019
• Published date: 01 November 2019
• DOI: http://doi.org/10.1002/pa.1933
• Author: Annmary Jose

COMMENTARY

India's regional disparity and its policy responses

Annmary Jose

Department of Economics, Institute for

Financial Management and Research, Chennai,

India

Correspondence

Annmary Jose, Department of Economics,

Institute for Financial Management and

Research, Alwarpet Chennai 600018, India.

Email: ann.jose@ifmr.ac.in

Regional disparities are an alarming issue in India, and it has been widening in spite of

various policy initiatives by the government to develop backward areas. The fruit of

high growth have not been distributed fairly across India's different regions and have

given rise to the threat of regional inequality. Disparities in social and economic

development, employment, and infrastructure amenities across the regions and

within regions have been a major challenge to policy makers and economists. This

paper is an attempt to understand the recent picture of regional imbalance in India

across its states. The paper tries to analyze the existing regional disparity in India in

terms of macroeconomic aggregates, social and economic infrastructure, and human

development. The paper also examines the various policy initiatives taken by the

government of India to achieve the regional balance in development.

1|INTRODUCTION

The Indian economy has witnessed an era of high growth and con-

tinues to be one of the fastest growing economies in the world. India

has achieved significant growth, with its gross domestic product (GDP)

growing at an average of 7% per year from 2004 to 2014. This high

growth leads to a rise in per capita income (PCI) double fold over a

period of 12 years and a reduction in absolute poverty. However,

the fruit of high growth have not been distributed fairly across India's

different regions and have given rise to the threat of regional inequal-

ity. Disparities in social and economic development, employment, and

infrastructure amenities across the regions and within regions have

been a major challenge to policy makers and economists since

independence. To tackle the issue of uneven development across

different regions of India, planning commission have formulated

special investment programs in backward regions and also initiated

various policies directed at encouraging private investment in such

regions (Kurian, 2000). Although there is a considerable amount of

policies to reduce regional disparities, the achievements were not

often commensurate with these policy initiatives. However, there is

a considerable level of disparity remain among different regions of

India, and it had worsened over the years. Kurian has pointed out that

accelerated economic growth since the early 80s appears to have

aggravated regional disparities (Kurian, 2000).

At the time of independence, India was very underdeveloped, and

income was unevenly distributed across regions. The main challenge

before the policy makers was to build an egalitarian society, coupled

with the balanced development of different regions. A regional dimen-

sion has been a crucial component of India's development policy.

The government has adopted the policy of active state intervention,

for example, by channeling capital investment to selected areas, to

reduce the disparities across different regions (Rajan, Pandey, Jayal,

Ramaswami, & Gupta, 2013). The policy initiatives of various 5‐year

plans emphasized achieving the goal of balanced regional develop-

ment and reducing interstate disparities.

Regional disparity is a multidimensional phenomenon in India.

Income disparity within the states has remained a serious concern

even today. Odisha, Bihar Uttar Pradesh, Rajasthan, and Madhya

Pradesh had the lowest PCI in the Eighth plan (Bakshi, Chawla, & Shah,

2015). But the 11th 5‐year plan has shown an improvement in average

growth rate with some of the economically weaker states even

exceeded the average growth rates of general category states. Even

though the less developed states performed better in economic

growth, we cannot claim that the regional disparity has reduced. In

addition to the income disparity, infrastructure disparity also contrib-

utes to the existing regional disparity. Higher investment in social

and economic infrastructure can lead to higher level of citizen's

well‐being as well as better educated and healthier workforce.

The National Human Development report reveals that the human

development index of the state like Bihar, Uttar Pradesh, Madhya

Pradesh, and Rajasthan are extremely low (Planning Commission,

2002). Given this background, this paper tries to analyze the existing

Received: 22 February 2019 Accepted: 23 February 2019

DOI: 10.1002/pa.1933

J Public Affairs. 2019;19:e1933.

https://doi.org/10.1002/pa.1933

© 2019 John Wiley & Sons, Ltd.

wileyonlinelibrary.com/journal/pa 1of9