Inter state inequalities in India

The problem of regional disparities in India has been accentuated over the plan periods although balanced regional development was the major thrust during plan periods. Lopsided industrialization in urban Industrial growth centers has aggravated the spatial variations existing in different regions of the country. Mahalanobis strategy of rapid industrialization through the promotion of heavy industries, lopsided infrastructural development, the strategy of Green revolution, tax devolution and Grants in-Aid by the Finance Commission have accentuated the dimension of regional disparities in India. Economists like Weber, P.S. Florence, Alagh, Singer, Francois Perroux, Myrdal and Kendall have postulated theorems underlying regional disparities. Kendell has devised index for measuring regional disparities. Following Williamson spatial disparities have been measured by coefficient of variation of the overall and sectoral indices. M.S. Ahluwalia has demonstrated that in the post reform period the performance of low income states has deteriorated relative to pre-reform period. Gini coefficient reveals that inter-state inequality has been accentuated over the years. Monthly per capita consumer expenditure and poverty ratio reveals that the disparities between rich and poor states have widened. PQLI incorporating life expectancy at birth, Infant mortality rate and literacy rate also reveal that disparities between rich and poor states have been accentuating. Tax devolution norms as per Twelfth Finance Commission with horizontal devolution formula determining the inter se tax shares of individual states have effectively reduced its progressivity at a time when regional disparities are being accentuated. High Income states have gained to the extent of 4.23% from FC awards where as low income states have lost by 4.59% which demonstrates yawning disparities existing between high and low income states. Planning Commission, Finance Commission and discretionary grants do not exhibit any bias or discrimination in favour of the backward states. The ratio of loans and grants in plan assistance is fixed at 70:30 and does not discriminate the backward states. Social development programmes such as Hill Areas Development Programme, North Eastern Council comprising North Eastern Hilly Regions and Desert Development programme will mitigate regional disparities. Eighth plan to Eleventh plan embark upon social sector cum rural development for which greater chunk of plan outlay has been earmarked for rural areas. Comprehensive poverty eradication programmes such as NREGS, regional planning, decentralised planning, Grants-in-aid to economically backward states and establishment of industries in backward states will mitigate the cruder form of regional disparities.