Social Scientist

Regional Disparities in India: Some Basic Issues

Author(s): A. C. Minocha
Source: Social Scientist, Vol. 11, No. 5 (May, 1983), pp. 51-57
Published by: Social Scientist
Stable URL: http://www.jstor.org/stable/3517103
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NOTE

RegionalDisparitiesin India:SomeBasicIssues

THE MAIN objective of this paper is to make an assessment of

policies intended to reduce regional disparities as visualised in the
plans, agalnst the background of regional development and spatial
organisatSionin India. Some basic issues relating to regional dispari-
ties have been highlighted with a view to establishing how the
government is beating about the bush. Regional disparities are, by
and large, an outcome of the working of the socio-economic system
and {ts processes. Partly they are aIso influenced by regional factors.
As in many other areas of development, regional imbalances stem
mainly from the failure of our planning process which is constrained
by the frameworkof mixed economy and the emerging pattern of
distribution within it. The problem of regional disparities in India
is to be seen in this larger context.
Regional disparities are expected to be reduced through
"planned eSorts". But the plans are formulated within the frarne-
work of an extremely iniquitous system of ownership of property and
a heritage of regional inequalities. Planning in India continues to
be aggregative and sectoralj devoid of spatial dimensions. This makes
integration of plans at diSerent levels and between different sectors
difficult. In recent years, regulations and controls have been diluted,
and the government has decided to allow large industrial houses and
FERA (Foreign Exchange Regulation Act) companies to make fresh
investments in such areas as were hitherto reserved for the public
sector and small units. The liberalisation of industrial licensing
provisions and the proposed amendments of the MRTP Act make
nonsense of the socio-economic objectives of the plans. The mecha-
nism of incentives and disincentives is not oriented to the larger
socio-economic objectives.
Even our public sector has becomean instrument of exploitation
as it has helped in strengthening the stranglehold of the private sector.
The distribution of income is closely related to the ownership of
means of production. An unequal distribution of incomes arising
from a highly skewed asset distribution is constraining the sustained
industrial growth. The CSOdata reveal that the pattern of consumption
expenditure is shifting in favour of upper ncome brackets. Regional
52 SOCIAL SCIENT1ST

disparitieslike other imbalancesand distortions in the economy, are

the manifestationsof the concentrationof wealthand income in the
handsof a few who preferto direct themin already developed areas
whereprivateprofitcouldbe masimised.
SpatialOrganisationin India
Duringthe Britishperiod,the colonialhinterlandwas exploited
to the benefitof the metropolitancountry. The processof 'growth
was confined to a few enclaves which assisted in the process of
exploilationof the hinterland. Since independence,the orgallisation
of spacehas undergonesome changes. But these changeshave taken
place in a llaphazardmanncr.The.hierarchtcalorganisationcontinues
to be biasedin favourof a few metropolitan citics and large urban
centres. The decennialpopulationgrowthrate in the periodlS61-1971
llas been39.25per cent for urbanand about 20 per cent for rural.
Witllinthe urban sector, cities with a population of over half a
millionare growingat 53.5per centpet decade,thosein the population
rangeof 5000-10,000 are growingouly at a rate of 1.42per cent. This
indicatesthat while the productivesystemof the country continues
to be stronglyrootedin agriculturein rural areas, the hierarchical
systemof settlementsis increasinglybecomingcelltralised in favour
of cities. Most of the small towns are languishingwith a poor
economicbase and are less viable in terms of industrial base as
comparedto cities. The metropolitancentresare the stronger part-
nersin the commercialrelationshipbetweenthe town andthe country
and like the metropolitancountryanan empire,are poised to exploit
the ruralhinterland. Incomedistribution,flow of capital, concen-
trationof economicpower,continueto be biased in favour of larger
cities. The location of functionsand facilities continuesto be mostly
urban-biased. The disparitybetweenrural and urbanincomesis very
wide. The gap is wideningover time.
Both in ruralandurbansectors, tlle beneficiaries,by and large,
are the upperincomegroups.This is due to the highlyskewednature
of asset distributionin the country. The land ownershippatternas
revealedby the agriculturalcensusof 1970-71,hlghlightsthe inequali-
ties in the countryside. Large holdings of 10 hectares and above,
constitutingjust 4 per cent of the total numberof holdings, account
for 30.7 per cent of the total land under operational holdings. But
inequalitiesin tl1eurbansector are more glaring.
The disparityin incomesand wealthis furtherreflectedthrough
the disparrtyin the availability of socsal amenities in the ruraland
urban sectors. For example,the rural literacy rate in 1971 was
23 percent against52 percent for the urbanareas. Fewerthana third
of allopatbicdoctorsservethe ruralpeople. The death rate in rural
areasis twice as muchas in cities alld the life expectancyten years
less thanin the urbanareas.
 REGIONAL DISPARITlES IN 1NDJA 53

The growth strategythat was adoptedhelpedin the processof

urbanaggloncerationand accentuationofregionaldisparities within
the spaceeconomy,notwithstandingthe emergenceof new industrial
centresandmarketcentresin responseto directed publicinvestment.
The new industrial centreshaveverylittle linkageswith theirrespec-
tive regiollaleconomies and have failed to become "growth poles"
as inttendedby the planners because of structural imbalancesand
absenceof channelsof transmissionof growth. The poles andnodes
of developmentare generallyrootless, incapableof actingas dynamic
centresof growthand change. The hinterlandcontinuesto be so poor
andbackwardthat it is not capableof takingadvantageof the process
of 'growth'initiatecl at the centre. These centres have become
centresof exploitationof regional resources withoutmuch trickle-
downeSects. We find the emergenceof a new class of contractors,
traders,governmentfunotionariesand 'consultants'who are squeezing
out the maxinlum surplus fromthese areas. The backwasheffects
outweighthe spreadeSects.
The concentrationof oligopolies, multinationals and large
businessllousesin urban agglomerationscontlnues ullabateddespite
industriallicensvIlgandthe nlechanismof incentivesand disincentives
to regulateindustriallocation. Industrial developmentcontinues to
be concentratedin a few pocketsof the country.Evenin thc so-called
industrialtyadvance-lStates, industrial activities continue to agglo-
merate at metropolitancities. In Maharashtrawhich is tlle most
highly ,industrialisedState of Inditl, the distribution of tlle nlanu-
facturing sector an 1975-76shows that the developed dittricts of
Greater Bombay-Thane-PIlne with a populationof 23 per cent of the
State, accounted for 80 per ccnt of the grossvalueof output and 83
per cent of the net valueaddedbythe organisedindllstriesin that year.
In fact, Maharashtraexcluding this region is industrially as backward
as Uthar Pradesh, Bihar or Rajasthan.
Even small-scale units have concentrated in metropolitan cities
and big towns. A recent survey by the Reserve Bank of India shows
that nearly 40 per cent of small-scale units are located in cities with
a population of one lakh and abo-ve and only 25 per ccXntin towns of
less than 10,000 population. Tile instrllments of industrial policy
like MRTPA, FERA andustrial licensing, control of capital issues,
mechanismof incentives and disincentives and flow of central alto-
cations, have not succeeded in correcting distortions and imbalances
in the industrial structure of the economy.
Extent of Regional Disparities
Over the plans, inter-regional disparities have widened as
revealedby the relativerangebetween the highestper capitaand the
lowestper capita income States, the coeffieBentof variations in per
capita inccomeand expenditure,and the Gini coefficlentof inequality.
 54 SOCIALSCIENTIST

The relative rangeof State income, measuredas the ratio between

the highestState per capita incomeand the lowest per capita income
increased from1.96 in 1960-61to 2.24 in 1970-71and2.6 sn 1975-76.
The coefficientof variation of State per capita income has gone up
from21.4in 1970-71to 27.1 in 1975-76and the Gini coefficientfrom
12.93 per cent in 1960-61to 14.33per cent in 1970-71and coefficient
of per capita expenditureincreased from 12.3 per cent in 1963-64to
14.1per cent in 1973.74.1
The States of Mahararhtra,West Bengal, Gujarat andTamil
Nadutogetheraccountedfor 57.37per cent of valueadded by manuw
facturein 1975-76in India.2 Fromthe point of view of the indexof
social development,Keralaappearsto be socially the most developed
State, followed by MaharashtraandPunjab which have higherper
capitaincomes. The next two States to follow are West Bengaland
Gujaratwhichalso havemoderatelyhigherper capita incomes.Tamil
Naduand Karnatakathen follow, thoughKarnatakahas a prettylow
per capita income. Haryanawith a veryhigb per capita income is
the next in order. The lower rungsof the ladderare representedby
Orissa, Bihar, MadhyaPradesh,Rajasthanand U P.3
Accordingto a studyby Moon.isRaza,4 of the 58 NSS regions,
only two, namelycoastalMaharashtraand the coastal plainsof West
Bengal, account for 22 per cent of the total non-householdmanu-
facturingemployment.Thesetwo regionsare followedby a set of four
regionsin descendingorder,namelysouthKerala,coastalTamilNadu,
inlandTamilNaduandwesternU P, each accountingfor more than
4 persent of the total non-householdemploymentof the country.One
disquietingfeatureis that 89 and 75percent respectivelyofthe NH
workersin coastal Maharashtra and centralplainsof West Bengalare
located in Class I towns. More than 17per cent of the total NH
manufacturing workersin India are concentratedin Bombay,Calcutta
and the ClassI townsof these agglomerations.All the ClassI towns
takentogetheraccountfor 50 per centof total NH employmentin the
country while the urbancenitresof lower order claim another 25
per cent. The relationshipbetweenthe householdand non-household
sectorsis competitiveand not complementary.The HH sector survi-
ves only in backwardregions,with a weaknon-householdsector.
In the fieldof agriculture,we admitthat we shouldnot expect
evenrates of growthbecauseof time-invariantregicneffects,like the
type of soilS natural endowments,but there is no justificationfor
wideningregionaldisparities,most of whichhave beenaccentuatedby
techllologicalandinstitutionalfactors. The strategyof GreenRevolu-
tion was a growth strategy which led to the emergenceof a few
pocketsof growth. TheJNU-PPD studySshows that growth ratesof
agriculturaloutput higher than 5 per cent have been experiencedin
approximately 12 per cent of the districtsof the countrybetweenthe
triennium 1963-1966and the triennium 197001973.These districts
 REGIONALDISPARITIESIN INDIA S5

accounted for 14 per cent of the gross cropped area but consumed 20
per cent of the major inputs. Since most of the modern inputs were
used by big cultvators in the areas of assured water supply, the
beneficiaries of the Green Revolution, by and large, were the big
cultivators who had the necessary resources to purchase moderninputs
and also had the surplus to market. The Green Revolution created
new areas of influence and strengthened the economic and political
power of the kulaks.
In terms of value of agricultural output per hectare (1970's) the
JNU-PPD study has identified three cores of htgh productivity, viz, (i)
Ganganagar-Punjab-Haryana,Western UP, (ii) Deltaic West Bengal
and its projection into central Bihar along the Ganga, (iii) the coastal
plains of Andhra, Tamil Nadu, Kerala and Karnataka These cores
are skirted by medium productivity regions. In terms of productivity
per worker, the areas of high productivity shrink and include only
Punjab, Haryana and Western U P. Thus grcen revolution has been a
highly localised phenomenon and in most parts of the country the
limited gains in land productivity have been effectively offset by
demographic and instiitutaonal factors. As a consequence, regional
disparities in agriculture have tended to get further accentuated.
Regional Planningin a Framework of Multi-Level Planning
We have been talking in terms of multi-level planning right
from the beginning of the Fourth Five Year Plan when the Task Force
on Multi-level Planning and Spatial Analysis was appointed in 1972.
But not much seems to have been done in this direction. No regionali-
sation of the country has been done for the purpose of planning. Even
the planning machinery at the existing territorial levels has not been
strengthened. The States have very little injtiative in the planning
process. Their administrative and financial autonomy is restricted on
account of their excessive dependence on the Centrat government.
The States, in turn, feel reluctant to transfer more powers to lower
territorial levels and other institutions which are supposed to function
autonomously, such as local bodies, universities, statutory corpora-
tions. The States constitute an important level of regional planning
but most of them do not have the necessary planning machinery and
apparatus and their five year plans are notbing but uncoordinated
aggregates of clatms of different departments. Their plans have been
mostly in the nature of slemandsfor more resources from the Centre
rather than serious exercises undertaken to formulate meaningful and
concrete programmesof development, suited to their factor-endow-
ments and requirements. There is virtually no vertical and horizontal
integration of plans at different territorial levels. There is no spatial
planniug, no locational analysis and no spatial and sectoral integra-
tion of the plans. A regronal approach has not been adopted to
planning so far. The Sixth Plan is in no way diSerent from the
56 SOCIALSCIENTIST

previous Plans in this respect.

Right from the First Plan, the rationale of area planning has
been recognised and this approach has manifested itself in different
forms: the Community Development Programale, the lutensive Agri-
cultural District Programme, the special programmes for weaker
sections, Drought-Prone Area Programmes, Hill Area Progran3me,
Command Area Programme an<lso on. The area plans so far have
not been translated into operational plans which are functionally,
spatially and temporally integrated. There has not been much decen-
tralisation of plan formulation at the district and the block level and
hardly any effective popular participation. The concept of area did
pot undergo any substantial changes or refinement in its many
incarnations in the plan documents, neither did it become a reality at
the operational or implementat,ion level.6 With a weak planning
machinery at the State level and vrtuatly no plan formulation machi-
nery at the district or block level, it would be futile to talk of area
and regional planning. But nothing concrete has been proposed in
the Sixth Plan to nleet these deficiencies and improve the instatutional
frameworkof the planning process in the country. The approach of
thc Sixth Plan represents no departure from the previous plans.
The National Committee on the Development of Backward
Areas (NCDBA) has recently made some specific recommendations in
its interim report, for the development of backward areas. The
NCDBA has recommendedthat the following features should form a
part of financial arrangementsfor the backward areas: (i) Sub-plan
approach. In the plan of every development, there should be a sub-
plan for the development of backward areas both at the State and
Central levels. (ii) Project fund for local planning and special additive
fund. (iii) Financial discipline so that the tendency to divert funds
intended for backward areas to more forward areas is checked. (iv)
Project-based implementation. (v) Incentaves to staff posted in
backward areas. Apart from resource transfers and public sector
programmesfqr the development of backward areas, the policy also
provides incentives to private entrepreneurs through schemes of
concessional finance, seed/margin money scheme, central !investment
subsidy scheme, tax reliefs, subsidies and so on.
But their whole approach to regional disparities is anlbivalent,
mostly repetitive of what has been evolved in the previous plans and
ignore the basic issues relating to regional planning and spatial
organisation.
Regional planning is not mere physical planning but includes
integrated and coordinated planning between physical, economic and
social components in a given region. The crux of the problem is that
the objective of balanced regional developlnent is sought to be pursued
under a highly inequitous system of private ownership of the means of
production, distrabutionand exchange, along with the colonial heritage
 REGIONALDISPARITIESIN INDIA

of regionaldisparities. Resourceallocataonunderthe marketimpulses 57

has aggravatedconcentrationof privatewealth and incomeas well as
regionalimbalances. By and large, resourceallcocationin the public
sectorhas reenforcedthe factors increasing inter-personaland inter-
State inequalities. Even the fiscal transfers from the Centre have
aggravatedinter-Statedisparities. lE'heinstrumentsof regulation,
controlandincentiveshave been too weakto overcomethe forces of
inequality. The strategiesof industrialand agriculturaldevelopment
havelargelybenefitedthe rich in the urbanandruralsectors. Regio-
nal andlocal planninglackedconceptualclarity apartfromorganisa-
tional and technical strength, The overall result is an aggravation
of the problemof regionalimbalances.

A C MINOCHA*
1 Grace Majumdar, "Trends in Inter-State Jnequalities in Per Capita Tncome
Expenditure" (Mimeo), paper presented at the annual conference of the
Society for the Study of Regional Disparities in 1980.
2 Central Statistical Organisation, "Jntra- and Inter- Regional DiSerentials in
the Manufacturing Sector 1975-76" (mimeo), 1981.
3 lbid.
4 Mooni s Raza, "Levels of Regional Development", Jawaharlal Nehru
IJniversity, New Delhi (Mimeo), 1979.
5 G S Bhalla, and Y K Alag'a, Performanceof Agriculture, Sterling, 1979.
6 Shreekant Sambrani, "Mytbology of Area Planning", Economic and Political
Weekly(Review o f JAgriculture), December 23 -30, 1979, pp A -135-A -139.

*Professor, Dept of Regional Planning and EconomicGrowth, Bhopal University,

Bhopal