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India's regional disparity and its policy responses

Article in Journal of Public Affairs · March 2019

DOI: 10.1002/pa.1933

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DOI: 10.1002/pa.1933

COMMENTARY

India's regional disparity and its policy responses

Annmary Jose

Department of Economics, Institute for

Financial Management and Research, Chennai, Regional disparities are an alarming issue in India, and it has been widening in spite of
India
various policy initiatives by the government to develop backward areas. The fruit of
Correspondence high growth have not been distributed fairly across India's different regions and have
Annmary Jose, Department of Economics,
given rise to the threat of regional inequality. Disparities in social and economic
Institute for Financial Management and
Research, Alwarpet Chennai 600018, India. development, employment, and infrastructure amenities across the regions and
Email: [email protected]
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 | I N T RO D U CT I O N before the policy makers was to build an egalitarian society, coupled

with the balanced development of different regions. A regional dimen-
The Indian economy has witnessed an era of high growth and con- sion has been a crucial component of India's development policy.
tinues to be one of the fastest growing economies in the world. India The government has adopted the policy of active state intervention,
has achieved significant growth, with its gross domestic product (GDP) for example, by channeling capital investment to selected areas, to
growing at an average of 7% per year from 2004 to 2014. This high reduce the disparities across different regions (Rajan, Pandey, Jayal,
growth leads to a rise in per capita income (PCI) double fold over a Ramaswami, & Gupta, 2013). The policy initiatives of various 5‐year
period of 12 years and a reduction in absolute poverty. However, plans emphasized achieving the goal of balanced regional develop-
the fruit of high growth have not been distributed fairly across India's ment and reducing interstate disparities.
different regions and have given rise to the threat of regional inequal- Regional disparity is a multidimensional phenomenon in India.
ity. Disparities in social and economic development, employment, and Income disparity within the states has remained a serious concern
infrastructure amenities across the regions and within regions have even today. Odisha, Bihar Uttar Pradesh, Rajasthan, and Madhya
been a major challenge to policy makers and economists since Pradesh had the lowest PCI in the Eighth plan (Bakshi, Chawla, & Shah,
independence. To tackle the issue of uneven development across 2015). But the 11th 5‐year plan has shown an improvement in average
different regions of India, planning commission have formulated growth rate with some of the economically weaker states even
special investment programs in backward regions and also initiated exceeded the average growth rates of general category states. Even
various policies directed at encouraging private investment in such though the less developed states performed better in economic
regions (Kurian, 2000). Although there is a considerable amount of growth, we cannot claim that the regional disparity has reduced. In
policies to reduce regional disparities, the achievements were not addition to the income disparity, infrastructure disparity also contrib-
often commensurate with these policy initiatives. However, there is utes to the existing regional disparity. Higher investment in social
a considerable level of disparity remain among different regions of and economic infrastructure can lead to higher level of citizen's
India, and it had worsened over the years. Kurian has pointed out that well‐being as well as better educated and healthier workforce.
accelerated economic growth since the early 80s appears to have The National Human Development report reveals that the human
aggravated regional disparities (Kurian, 2000). development index of the state like Bihar, Uttar Pradesh, Madhya
At the time of independence, India was very underdeveloped, and Pradesh, and Rajasthan are extremely low (Planning Commission,
income was unevenly distributed across regions. The main challenge 2002). Given this background, this paper tries to analyze the existing

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https://doi.org/10.1002/pa.1933
2 of 9 COMMENTARY

regional disparity in India in terms of macroeconomic aggregates, TABLE 1 Percentage growth rate of state domestic product in India
social and economic infrastructure, and human development. (2008–09 to 2013–14)
The paper also examines the various policy initiatives taken by the 2008– 2009– 2010– 2011– 2012– 2013–
government of India to achieve the regional balance in development. States 2009 2010 2011 2012 2013 2014

Andhra Pradesha 2.14 7.24 6.81 6.25 4.05 7.16

Arunachal Pradesh 8.73 9.42 3.80 5.56 −1.60 8.91
2 | S O U R C E S OF R E G I ON A L D I S P A R I T Y I N
Assam 5.72 9.00 5.23 4.63 5.15 7.50
INDIA
Bihar 14.54 5.35 15.03 10.29 10.69 9.12
Chhattisgarh 8.39 3.42 10.60 5.71 8.79 4.99
2.1 | Income disparity
Goa 10.02 10.20 16.89 20.21 4.17 7.71
India's rapid growth is associated with high‐income disparities. Gujarat 6.78 11.25 10.01 6.66 6.15 8.76
The unevenness of regional development is very evident among the Haryana 8.17 11.72 7.41 8.03 5.50 6.97
growth performance of various states. Historically, peninsular India Himachal Pradesh 7.42 8.09 8.79 7.31 6.14 6.24
was much ahead of the hinterland in terms of development and mod-
Jammu and Kashmir 6.46 4.50 5.65 7.66 5.34 5.63
ernization. This, itself, manifests the unequal level of development.
Jharkhand −1.75 10.14 15.86 4.49 7.43 8.91
After independence, some pockets of the country developed as indus-
Karnataka 7.11 1.30 10.15 3.69 6.08 7.15
trial areas, and this aggravated the existing disparity further. Table 1
shows the recent changes in the growth rate of GSDP of Indian states Kerala 5.56 9.17 6.92 5.85 5.92 6.27

from 2008 to 2009 to 2014–2014. The growth rates of state domestic Madhya Pradesh 12.47 9.56 6.31 8.54 8.70 9.48

product fluctuate across the states over the years. The growth rates Maharashtra 2.58 9.30 11.26 4.52 7.78 7.28
show a huge gap in the year 2008–2009. However, over the years, Manipur 6.56 6.89 −0.58 9.67 7.04 6.21
the gap between the highest growing state and the slowest growing Meghalaya 12.94 6.55 8.57 12.50 3.80 9.76
state has decreased a lot. In the year 2013–2014, Madhya Pradesh Mizoram 13.34 12.38 17.18 −2.55 7.23 7.78
recorded the highest growth (9.48), and Odisha achieved 1.82%
Nagaland 6.34 6.90 9.35 8.32 6.45 6.52
growth, lowest in the country. Growth achieved by Bihar over the
Odisha 7.75 4.55 8.01 3.98 3.76 1.82
years was remarkable; it exceeded the average growth rate of general
Punjab 5.85 6.29 6.52 6.52 4.64 5.73
category states. Even though the gap in the growth rate of state
domestic product has reduced, we cannot establish that there are Rajasthan 9.09 6.70 14.41 8.34 6.41 4.79

equalizing incomes across states. Sikkim 16.39 73.61 8.70 10.77 7.62 7.87
However, the gap in the growth rates across the states has Tamil Nadu 5.45 10.83 13.12 7.39 3.39 7.29
reduced; this has not been reflected in the level of PCI across states. Telangana 13.44 1.15 18.03 8.66 4.11 4.76
Ahluwalia (2013) pointed out that there are wide differences across Tripura 9.44 10.65 8.12 7.24 11.16 9.23
the states in levels of PCI and which has increased over the years.
Uttar Pradesh 6.99 6.58 7.86 5.58 5.78 4.95
The coefficient of variation of PCI across the states has increased from
Uttarakhand 12.65 18.13 10.02 9.36 7.45 8.43
around 28% in 1980s to 41% in 2011–2012 (Bakshi et al., 2015). The
West Bengal 4.90 8.03 5.78 4.72 7.53 6.91
growth rate of the states for the period 2001–2010 against the log of
India 6.72 8.59 8.91 6.69 4.47 4.74
PCI in 2001 has shown an upward sloping relationship (Figure 1). The
upward sloping curve indicates that states with a higher initial PCI on Source: Central Statistical Office.
average grew faster, suggesting that the inequality across states is a
Estimates related to bifurcated Andhra Pradesh. The growth rates are
increasing. So it clearly shows that income disparity remains an calculated at 2004–2005 prices.
alarming issue even today.
It is also important to look at the level of poverty in the country. 2.2 | Human development
Table 2 gives the percentage and number of people below the poverty
line for the year 2004–2005 and 2011–2012. The improvement in Along with faster economic growth and reduction in poverty, there
economic growth and PCI translated, partially, into a reduction in the has been an accelerated improvement in human development
level of poverty in the country. The percentage of population below indicators across states. Table 3 allows us to compare improvement
the poverty line fell from 37.2% in 2004–2005 to 21.92% in 2011– in Human Development Index (HDI) across the states over the years
2012. Although there is a reduction in poverty, it has not applied to 1999–2000 and 2007–2008 (Planning Commission, 2011). The top
the whole country uniformly. The percentage of population below four ranked states for the 2 years remain the same—Kerala, Himachal
the poverty line has shown an increase in Arunachal Pradesh, Pradesh, Goa, and Punjab. At the other end, mostly the northern and
Mizoram, and Nagaland. For the rest of the states, the rate of change eastern states—Chhattisgarh, Odisha, Bihar, Madhya Pradesh, and
in poverty varies largely across the states. Jharkhand—have the lowest HDI. The states that have done well in
COMMENTARY 3 of 9

TABLE 2 Number and percentage of people below the poverty line:

2004–2005 and 2011–2012

2004–2005 2011–2012

% of No. of persons % of No. of persons

States Persons (in Lakhs) Persons (in Lakhs)

Andhra Pradesh 29.6 235.1 9.20 78.78

Arunachal 31.4 3.8 34.67 4.91
Pradesh
Assam 34.4 97.7 31.98 101.27
Bihar 54.4 493.8 33.74 358.15
Chhattisgarh 49.4 111.5 39.93 104.11
Goa 24.9 3.4 5.09 0.75

FIGURE 1 Growth during 2001–2010 and income in 2001. Source: Gujarat 31.6 171.4 16.63 102.23
Twelfth‐five year plan, Volume I, Chapter 11 Haryana 24.1 54.6 11.16 28.83
Himachal Pradesh 22.9 14.6 8.06 5.59
the education and health front are also showing an improvement in
Jammu and 13.1 14.5 10.35 13.27
HDI and thus higher PCI. States like Madhya Pradesh (MP), Odisha, Kashmir
Bihar, and Uttar Pradesh (UP) have shown tremendous improvement Jharkhand 45.3 132.1 36.96 124.33
in their HDI over time, leading to a convergence in HDI across states.
Karnataka 33.3 186.5 20.91 129.76
The coefficient of variation of the states in 1999–2000 was 0.313 and
Kerala 19.6 62.0 7.05 23.95
fell sharply to 0.235 in 2007–2008 (Bakshi et al., 2015). These results
Madhya Pradesh 48.6 315.7 31.65 234.06
strongly suggest that there is an improvement in education and health
outcomes among the poor states in India and the gaps with the all Maharashtra 38.2 392.4 17.35 197.92

India average narrowing over time. Manipur 37.9 9.0 36.89 10.22

As we have seen, the disparity in HDI is basically stem from the Meghalaya 16.1 4.1 11.87 3.61
disparities in education and health indicators across states (Table 4). Mizoram 15.4 1.5 20.40 2.27
State‐wise data on human development indicators display consider- Nagaland 8.8 1.7 18.88 3.76
able variation in performance across states. Kerala was the best per- Orissa 57.2 221.6 32.59 138.53
former, witnessing a literacy rate of 93.91%, the sex ratio of 1,084,
Punjab 20.9 53.6 8.26 23.18
and infant mortality rate of 12 per thousand. At the other end of the
Rajasthan 34.4 209.8 14.71 102.92
spectrum, the worst performance on these indicators was displayed
Sikkim 30.9 1.7 8.19 0.51
by Bihar (lowest literacy rate of 63.82%), Haryana (sex ratio of 877),
and MP (infant mortality rate [IMR] of 67). Importantly, the BIMARU Tamil Nadu 29.4 194.1 11.28 82.63

states, despite witnessing impressive growth rates, continued to Tripura 40.0 13.4 14.05 5.24
remain at the bottom of the distribution in terms of performance on Uttar Pradesh 40.9 730.7 29.43 598.19
human development indicators. West Bengal 34.2 288.3 19.98 184.98
Gender gaps in literacy rate across states are also an important All India 37.2 4072.2 21.92 2697.83
issue. According to 2011 statistics, the effective literacy rates in
Note. The figures are based on Tendulkar Methodology.
2011 were 80.9% for men and 60.64% for women. The average
Source: Planning Commission Annual Report, 2013–2014.
literacy rate of nonpoor states for both the sexes is far better than
the poor states. It is important to note that the poor states lag in all
the development aspect. India. In India, only some pockets are well developed in terms of
infrastructure amenities. The growth of industrial hubs and urban
cities can be one of the reasons for that. Even today, India's rural
2.3 | Infrastructure disparity area lacks proper connectivity from one village to another village.
The central government has initiated a lot of infrastructure investment
Improvement in the quality of infrastructure is an essential prerequisite policies to address the problem of widening the regional gap. The
for economic growth. Availability of adequate infrastructure is the low‐income states invest in infrastructure supported by central
precondition for sustainable economic growth and social development. government and private investment, which in turn improves the
Lack of infrastructure facility poses a serious threat to India's economic growth potential of those states potentially (Planning Commission,
development. Due to an inadequate infrastructure facility, many 2012a, 2014b). The states have increasingly invested in the
international firms show a lack of interest to set up their business in development of agriculture, communication, energy, and transport.
4 of 9 COMMENTARY

TABLE 3 Human development index (HDI), 2007–2008 and 1999– TABLE 4 Disparities in human development indicators
2000
Literacy Female Sex IMR
HDI State Rate (2011) Literacy (2011) Ratio (2011) (2009)
Change Andhra Pradesh 67.66 59.74 992 49
State 2007–2008 1999–2000 in HDI
Assam 73.18 67.27 954 61
Kerala 0.790 0.677 0.113 Bihar 63.82 53.33 916 52
Himachal Pradesh 0.652 0.581 0.071 Jharkhand 67.63 56.21 947 44
Goa 0.617 0.595 0.022 Gujarat 79.31 70.73 918 48
Punjab 0.605 0.543 0.062 Haryana 76.64 66.77 877 51
North‐East (excluding Assam) 0.573 0.473 0.100 Himachal Pradesh 83.78 76.6 974 45
Maharashtra 0.572 0.501 0.071 Jammu and 68.74 58.01 883 45
Tamil Nadu 0.570 0.480 0.090 Kashmir

Haryana 0.552 0.501 0.051 Karnataka 75.6 68.13 968 41

Jammu and Kashmir 0.529 0.465 0.064 Kerala 93.91 91.98 1084 12

Gujarat 0.527 0.466 0.061 Madhya Pradesh 70.63 60.02 930 67

Karnataka 0.519 0.432 0.087 Chhattisgarh 71.04 60.59 991 54

West Bengal 0.492 0.422 0.070 Maharashtra 82.91 75.48 925 31

Uttaranchal 0.490 0.339 0.151 Orissa 73.45 64.36 978 65

Andhra Pradesh 0.473 0.368 0.105 Punjab 76.68 71.34 893 38

Assam 0.444 0.336 0.108 Rajasthan 67.06 52.66 926 59

Rajasthan 0.434 0.387 0.047 Tamil Nadu 80.33 73.86 995 28

Uttar Pradesh 0.380 0.316 0.064 Uttar Pradesh 69.72 59.26 908 63

Jharkhand 0.376 0.268 0.108 Uttarakhand 79.63 70.7 963 41

Madhya Pradesh 0.375 0.285 0.090 West Bengal 77.08 71.16 947 33

Bihar 0.367 0.292 0.075 Source: Literacy data and sex ratio are from Census of India, 2011; IMR
Odisha 0.362 0.275 0.087 data are from SRS Bulletin, January 2011

Chhattisgarh 0.358 0.278 0.080

Source: India Human Development Report, 2011. a black‐topped road or pucca road (Figure 2). We can observe a clear
disparity in terms of infrastructure facility across the states. In the case
Recently, the planning commission has developed a composite index of all the facilities, Kerala shows the highest share. If we consider the
of infrastructure combining both social and economic infrastructure. Northeast states, there is high disparity exist among those seven
It identified five categories—agriculture, communication, banking, states in terms of a various infrastructure facility.
electricity, and railways—and took into account 12 indicators to In case of share of villages having blacktopped road, 99% of Kerala's
develop infrastructure index. This index reports that Kerala, Uttar villages have black‐topped road, but on the other hand, we have
Pradesh, Gujarat, Himachal Pradesh, Karnataka, and Tamil Nadu have Sikkim, where only 19% of the villages have black‐topped road. The
shown improvement in infrastructure ranking (Planning Commission, condition is similar among all the given facilities across states.
2012a). This is primarily due to improvement in surface roads, rail The share of electricity connection is an indicator of the level of energy
density, irrigation, and rural electrification. Maharashtra and Haryana availability in different states. It is not worthy that states such as
performed badly in infrastructure index. Kerala, Jammu Kashmir, Uttaranchal, Haryana, Gujarat, Andhra
In this paper, I present some statistical information about Pradesh, and Karnataka have more than 80% of their villages having
infrastructure amenities across the states. Table 5 shows the share electricity connection. However, the important point is the fact that
of villages having a particular infrastructure facility in the state. I have there is substantial interstate variability in the availability of electricity
taken six key infrastructure variables such as share of villages having a across states.
primary school, the share of villages having a Maternal and Child
Welfare Centre, the share of villages having a post office, share
villages having a black‐topped road, the share of villages having 3 | P O L I C Y I N I T I A T I V E S TO A D D R E S S
electricity connection, and share of villages having agriculture credit R E G I O N A L I N E Q U A LI T Y
society. I also provide a graphical representation of spatial disparity
that exists in India in terms of two infrastructure facilities such as Regional disparities are a major source of concern for faster and more
share of villages having a primary school and share of villages having inclusive growth at the national level. The central government has
COMMENTARY 5 of 9

TABLE 5 Infrastructure disparity in India (2011)

States Primary school MCWC Post office Black‐topped road Electricity connection Agriculture Credit Society

Jammu and Kashmir 0.89 0.039 0.24 0.49 0.96 0.03

Himachal Pradesh 0.53 0.024 0.23 0.46 0.77 0.17
Punjab 0.89 0.116 0.33 0.90 0.94 0.29
Uttaranchal 0.67 0.044 0.17 0.36 0.30 0.05
Haryana 0.92 0.090 0.40 0.94 0.97 0.26
Rajasthan 0.70 0.136 0.35 0.24 0.44 0.16
Uttar Pradesh 0.71 0.076 0.15 0.63 0.56 0.06
Bihar 0.78 0.159 0.26 0.60 0.19 0.22
Sikkim 0.77 0.123 0.40 0.74 0.10 0.41
Arunachal Pradesh 0.48 0.004 0.05 0.19 0.02 0.004
Nagaland 0.87 0.006 0.15 0.25 0.02 0.014
Manipur 0.75 0.001 0.23 0.45 0.79 0.037
Mizoram 0.82 0.065 0.43 0.34 0.20 0.031
Tripura 0.96 0.103 0.58 0.81 0.50 0.12
Meghalaya 0.76 0.023 0.067 0.40 0.044 0.004
Assam 0.92 0.013 0.13 0.23 0.088 0.015
West Bengal 0.85 0.094 0.21 0.40 0.39 0.105
Jharkhand 0.80 0.061 0.16 0.89 0.08 0.04
Odisha 0.80 0.014 0.18 0.60 0.27 0.023
Chhattisgarh 0.94 0.049 0.16 0.63 0.49 0.07
Madhya Pradesh 0.87 0.028 0.15 0.51 0.65 0.092
Gujarat 0.96 0.048 0.46 0.94 0.98 0.42
Maharashtra 0.91 0.049 0.34 0.81 0.75 0.50
Andhra Pradesh 0.93 0.094 0.57 0.84 0.90 0.177
Karnataka 0.85 0.090 0.35 0.86 0.93 0.173
Kerala 0.98 0.753 0.98 0.99 0.96 0.65
Tamil Nadu 0.87 0.223 0.56 0.90 0.73 0.253
All India 0.83 0.065 0.32 0.65 0.55 0.164

Note. These figures represent the share of villages which has a particular infrastructure amenity in a state. MCWC is Maternal and Child Welfare Centre.
Source: Census of India, 2011

been helping the state governments through various transfers to Central governments intervention to tackle regional disparities falls
achieve an equalizing level of development. Two major sources of mainly into two categories. The first is to direct investment into less
financial transfers to the states have been transfers under the finance developed states under Centrally Sponsored Schemes through
commission and the plan transfers. The transfers are more equitable favorable norms of distribution. One example can be seen in the case
and based on PCI, population, geographical area, and similar other of Indira Awas Yojana; funds are allocated state wise based upon
factors that are reflective of low PCI states. housing shortage and population below the poverty line. It will help
Policy makers have recognized that inclusive growth necessitates a backward states to get more central assistance for capital formation.
sharper focus on slower growing states, especially the backward Following the favorable norms of distribution, in 2010–2011, Bihar
regions in the country. Efforts to tackle regional disparities can only received about 25% of the allocation under the programmer. Similarly,
be successful with higher levels of public investment in physical and in the case of the National Rural Health Mission, 17 states have been
social infrastructure, which in turn, would provide the basis for overall identified for focused attention.
faster rates of growth (Planning Commission, 2012a). The government Second and the more important measurement taken by the
has recognized the need to pump more investment and capital to the central government are the special area development programs that
backward areas to achieve equitable growth. The policy makers have focus on the development of backward regions exclusively. These
formulated special area programs to tackle the issue of regional area‐based programs are also called place‐based policies in the
disparity effectively. literature and very successful in the developed world and reduced
6 of 9 COMMENTARY

FIGURE 2 Spatial distribution of primary school and Pucca road in India (2011)

the regional disparity in employment generation, income distribution, the Hill Area Development Programme/Western Ghats Development
and infrastructure facilities (Neumark & Simpson, 2015). Area‐based Programme.
programs first identify the backward regions of a country and try to The government of India approved IAP in 2010 and for 60
formulate policies based on the requirement of the particular region. selected tribal and backward districts. It has been extended to the
These programs will have a clear focus on the development aspect 12th 5‐year (2012–2017) plan period and covered 88 most back-
of the region and seek to enhance the economic performance of ward districts. The IAP transfers a huge amount of 25 to 30 crores
the region. The important policy initiatives of the central government to each identified district, and the funds will be placed at the dis-
to tackle the issue of regional disparity are Integrated Action Plan posal of the committee headed by the district collector. These funds
(IAP) for selected tribal and backward districts, Backward Region are mainly utilized to improve the infrastructure facility in the district
Grant Fund (BRGF), the Border Area Development Programme, and such as school buildings, Anganwadi centers, primary health centers,
COMMENTARY 7 of 9

drinking water supply, and village roads (Planning Commission, TABLE 6 Flagship programs for states
2012a). The program had identified the lack of infrastructure is the
2012– 2012– 2013– 2013–
main problem of Left Wing Extremism (LWE) affected areas. This SI. 2013 2013 2014 2014
has caused severe damage to the economy and the overall develop- No. Flagship schemes (BE) (RE) (BE) (RE)
ment of the region. It has been identified that Chhattisgarh and 1. Mahatma Gandhi 33,000 29,387 33,000 33,000
Odisha have the most affected districts followed by Jharkhand, National Rural
Bihar, Madhya Pradesh, and Andhra Pradesh (Planning Commission, Employment
2012a). The IAP has focused mainly on these areas and tries to Guarantee Act

develop the infrastructure facilities in these areas. 2. Indira Awas Yojana 11,075 9,024 15,184 13,184

Apart from the mere transfer of fund, IAP also consists of 3. Sarva Shiksha Abhiyan 25,555 23,645 27,258 26,608
monitoring of development activities. The monitoring system in place 4. Mid Day Meal 11,937 11,500 13,215 12,189
has been developed as a web‐based application that monitors the 5. Pradhan Mantri Gram 24,000 10,000 21,700 9,700
physical and financial performance of development works. This system Sadak Yojana
has been used to monitor 11 flagship programs undertaken by the 6. National Rural Drinking 10,500 10,500 11,000 9,700
Government of India in LWE affected areas. The implementation and Water Mission
monitoring system of the IAP was conceived to give a considerable 7. Nirmal Bharat Abhiyan 3,500 2,500 4,260 2,300
push in taking development forward especially in tribal and 8. National Social 8,382 7,882 9,541 9,541
backward districts. Assistance
BRGF was one of the widely recognized area development Programme

programs in its size and reach. The program was implemented in the 9. National Health Mission 20,542 17,000 20,999 18,100
year 2006–2007 in 250 backward districts if the country. BRGF 10. Backward Region Grant 12,040 10,524 11,500 2,800
program has implemented as an improvement over Rashtriya Sam Fund

Vikas Yojana, which was launched in 132 selected districts (including 11. Jawaharlal Nehru 12,522 6,822 14,000 7,191.18
100 backward districts and 32 districts affected by left extremism) National Urban
Renewal Mission
in 2003–2004. The main objective of the program was to reduce
12. Rashtriya Krishi Vikas 9,217 8,400 9,954 7,089
the infrastructure disparity between the rich and poor districts in
Yojana
India. The backward regions were identified based on certain indica-
13 Integrated Child 14,250 14,250 15,912.2 14,648
tors like the value of the output per agricultural workers, agricultural
Development service
wage rate, and percentage of SC/ST population in the districts (Plan-
14 Accelerated Irrigation 14,242 7,342 12,962 6,162
ning Commission, 2014a). Apart from reducing infrastructure dispar- Benefit Programme
ity, capacity building and professional support for promoting
15 National Rural 3,195 2,600 4,000 2,600
participatory planning were recognized as an important objective of Livelihood Mission
the BRGF program. The other main importance of the program is that
16. Rajiv Gandhi Grameen 4,900 2,492 4,500 3,137.65
it gives special attention to the involvement of local people in the Vidyutikaran Yojana
process of policy making. The program to be implemented under 17 Restructured‐ 3,114 1,500 575 700
the fund will be chosen based on people's participation, particularly Accelerated Power
through Gram Sabhas in the rural areas and ward committees in the Development and
Reform Programme
urban areas.
The BRGF program consists of two funding windows; the first one Total 221,971 175,368 229,560 178,650

is a capacity building fund of Rs. Two hundred fifty crores per annum Note. All the figures are in crores (Rs.). BE: budget estimates; RE: revised
(Rs. 1 crore for each district). This amount is basically used to build estimates.
capacity in planning, implementation, and monitoring. The second Source: Expenditure Budget Volume I and II 2013–2014 and 2014–2015.
one is a substantial united grant. The main objective of the develop-
ment grant is to achieve integrated development by giving more
importance to infrastructural development. According to this fund, Besides the 250 backward regions, BRGF also consists of special
each district gets a minimum of Rs 10 crores per annum, though the package for Bundelkhand, Bihar, West Bengal, and some selected
final amount is decided based on the proportion of population and districts of Odisha (KBK). These special plans are formulated to bring
area of the district. In each district, the Gram Sabha and the ward about improvement in sectors like power, road connectivity, irrigation,
committee decide on the assets to be created under BRGF. On the watershed management, and forestry. The special plans are developed
basis of this ground level report, each panchayat and municipality will mostly given the local needs of the region and are very effective.
make a participatory plan and which will be consolidated into an A report by the planning commission has pointed out that dropout
annual action plan. This plan reflects all the financial resources rates in KBK districts have been reduced from 57.13% in
available in the district. 1996–1997 to 6.79% in 2008–2009 (Planning Commission, 2012a).
8 of 9 COMMENTARY

It has also observed that the enrolment rate in primary schools in KBK 4 | CO NC LUSIO N
districts has gone up from 75.89% in 1996–1997 to 94.11% in 2008–
2009. Similarly, the enrolment rate in upper primary schools in KBK Different regions of India will certainly benefit from these regional
districts has gone up from 56.39% in 1996–1997 to 95.29% in development programs. There will also be spill‐over effects from
2008–2009 (Planning Commission, 2012a,b). From these primary growth centers and which will spread further into adjacent areas. Even
analyses, we could see that changes are happening in the backward though there are a plethora of programs to address the development
districts. But the progress is very slow, and the programs failed to issue, the data presented in the earlier sections indicate that there
bring about an equitable development across states even after are considerable disparities in socioeconomic development across
rigorous planning. Indian states. Not only interstate disparities but also intrastate
Border Area Development Programme (BADP) is another centrally disparities are also on the rise. As we have seen, the convergence in
funded program initiated in the border areas of the western region growth rates is not reflected in the equalizing income across the
during the seventh 5‐year plan (1985–1990). The program focused states. There is huge income disparity among various states in India
on ensuring balanced development through infrastructure develop- coupled with the difference in human development index. The case
ment and promotion of security among the border population. with the infrastructure facilities is also not different. There exist
The program now covers 358 border blocks of 94 border districts of huge gaps in basic amenities like health facilities, bank facilities, road
17 states located along the international land border. Works under connectivity, clean drinking water, post office, and telephone
BADP are taken up by the states under various sectors such as connection. N. J. Kurian opined that the economic reforms of 1991
strengthening of social and economic infrastructure—filling up of with stabilization and deregulation policies seen to have further
critical gaps in the road network, especially link roads, bridges, aggravated the interstate disparities (Kurian, 2000).
culverts, and so on—schemes for employment generation, education, At this point, the backward states require more investment in
health, agriculture and allied sector, and schemes, which provide for their social and infrastructure sectors. As we have seen, I had
critical inputs in the social sector (Planning Commission, 2012a,b). many development programs such as area development programs,
However, the program had a positive impact on the life of the people employment generation programs, and infrastructure development
in border districts; it failed to offer a full‐fledged development to these programs. But one major criticism against these programs is the lack
areas because the allocation under the program was too small to of funds provided by these programs. Many times the funds are not
address the livelihood and other socioeconomic issues. enough to finance a meaning full infrastructure investment at the block
One of the earlier programs to address the problem of regional level. Massive investment in social sectors such as education and health
disparity is called Area Development Programme or Western Ghats care should be promoted. India performed better in education front
Development Programme. The program has been in operation since compared with the last era. But the health‐care system should be
the fifth 5‐year plan in identified hill areas. The program covers two hill improved to achieve better outcomes. More research and ground level
districts of Assam (North Cachar and Karbi Anglong), major part of understanding are required to identify the backward regions. Within
Darjeeling district in West Bengal Nilgiris district Tamil Nadu and 175 the districts, which are identified backwards seem to have different
talukas of Western Ghats.1 The program tries to achieve regional layers of development. The challenge of the policy makers is to
balance through ecologically sustainable socioeconomic development identify these different levels of development and formulate policies
of hill areas. The schemes being implemented under the program are accordingly. To conclude, regional disparities remain as an alarming
mainly in the sectors of agriculture and soil conservation, forestry, social issue even today, and to tackle this, policy makers have to identify the
forestry, animal husbandry, sericulture, apiculture, minor irrigation, pockets of under development and fund according to the local needs.
fisheries, link roads and footbridges, small scale industries, watershed
development, the welfare of SC?ST, and rural energy conservation. ORCID
The program got restructured because of the lack of tangible outcomes. Annmary Jose https://orcid.org/0000-0002-5017-0716
Apart from these policy initiatives, government also have other
specific programs like North‐Eastern Region Development, Rajiv RE FE RE NC ES
Gandhi Panchayat Sashaktikaran Abhiyan, Providing Urban Amenities
Ahluwalia, M. S. (2013). Regional balance in Indian planning. In The new
to local Areas (PURA), Mahatma Gandhi National Rural Employment Bihar: Rekindling governance and development. India: HarperCollins India.
Guarantee Act, Pradhan Mantri Gram Sadak Yojana, Rajiv Gandhi Bakshi, S., Chawla, A., & Shah, M. (2015). Regional disparities in India:
Grameen Vidyutikaran Yojana, Total Sanitation Campaign, and so forth. A moving frontier. Economic and Political Weekly, 50(1), 44–52.
Table 6 shows the budgetary allocation of funds to the 17 major flagship Kurian, N. J. (2000). Widening regional disparities in India: Some indicators.
programs in India for the years 2012–2013 and 2013–2014. These Economic and Political Weekly, 35(7), 538–550.
programs together try to uplift poor in the country and also help the Neumark, D., & Simpson, H. (2015). Place‐based policies. In Handbook of
backward districts to perform better in various development aspects. Regional and Urban Economics (Vol. 5, pp. 1197–1287). Elsevier,
https://doi.org/10.1016/B978‐0‐444‐59531‐7.00018‐1

1
Planning Commission. (2002). National human development report 2001.
The 175 talukas spread across the five states: Maharashtra (63), Karnataka (40), Kerala (36),
Tamil Nadu (33), and Goa (3). Planning Commission. (2011), India Human Development Report, 2011
COMMENTARY 9 of 9

Planning Commission. (2012a). Integrated Action Plan (IAP) for selected master's degree in economics from Hyderabad Central University
tribal and backward districts: Glimpses of some projects taken up under and also holds the graduate degree from the same university.
IAP volume I.
She also worked as a research assistant at Centre for Economic
Planning Commission. (2012b). Twelfth five year plan (2012‐2017).
and Social Studies, Hyderabad. Her areas of interest include
Faster, more inclusive and sustainable growth, I, 302–321.
development economics, macroeconomics, impact evaluation,
Planning Commission. (2014a). Evaluation study of Backward Region Grant
Fund (BGRF). PEO report No.223. New Delhi: The government of India. and economic policy. Her broad area of research is growing
regional disparities in the context of India.
Planning Commission. (2014b). Annual Report 2013–14.
Rajan, R., Pandey, T. K., Jayal, N. G., Ramaswami, B., & Gupta, S. (2013).
Report of the committee for evolving a composite development index
of states. Ministry of Finance, Govt. of India. How to cite this article: Jose A. India's regional disparity and
its policy responses. J Public Affairs. 2019;e1933. https://doi.
org/10.1002/pa.1933
AU THOR BIOG RAPH Y
Annmary Jose is a Doctoral Research fellow at the Institute for
Financial Management and Research, Chennai, India. She holds a

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