Day 12 – Q 5.Delve upon the factors that have led to different levels of economic growth in different states of India. What measures have been taken to ensure that the backward states catch up the growth wagon? Discuss.

5. Delve upon the factors that have led to different levels of economic growth in different states of India. What measures have been taken to ensure that the backward states catch up the growth wagon? Discuss. 

भारत के विभिन्न राज्यों में आर्थिक विकास के विभिन्न स्तरों पर होने के कारकों पर चिंतन करें। यह सुनिश्चित करने के लिए क्या उपाय किए गए हैं कि पिछड़े राज्यों में वृद्धि दर बढ़ सके? चर्चा करें।

Introduction:

The pattern of economic growth across the states in India has been a matter of policy evaluation due to various factors from many years. In the context of ‘balanced regional development’, the trickle-down of growth from one region to another and the spill over effects has a wide gap in India.

Body:

Factors that have led to different levels of economic growth across states:

• Major policy shifts of 1991 and structural adjustments programmes: Impacted the nature of Centre-state relations and inter-relationship of economies of states due to stabilization measures and strategic changes incorporated as a result of globalisation.
• Industrial reform policy did not encourage similar growth momentum in all states as investment expenditures undertaken by individual states differed.
• Transfer of power from government controls in favour of markets in deciding the location and level of investment resulting in varied investments across regions. For ex: States like Bihar, MP, Rajasthan etc. lagged behind as compared to significantly growing states like Gujarat, Maharashtra etc.
• Growth experience of states: Inability of states to sustain higher growth as a result of dependency on agriculture only. Ex: Steady acceleration of agricultural growth was seen only in Karnataka, Kerala and WB whereas industrial growth fuelled states like Gujarat, Punjab etc. Maharashtra and West Bengal were the only states which witnessed high growth rates across all 3 sectors of agriculture, industry and services.
• Uni-directional growth spill over among states: States like Rajasthan and WB are considered growth-inducing states as they subsequently help in growth of other states when they grow, but vice-versa was not observed.
• Local factors: Availability of human and natural resources and conducive environment across different states.
• Quality of state-specific institutions: Varied investment models, policy implementation techniques etc.
• Access to markets, communication and transport: Coastal states like GJ, MH, KL, Andhra Pradesh etc have efficient port facilities for transport and export/import of goods while several states in the hinterland and North-Eastern region suffer from lack of infrastructure as a result of difficult or non-conducive terrain.
• Social and physical factors: The socio-economic fabric and the reception of economic factors, barriers due to naxal-affected areas, less attraction to investors due to underdeveloped social indices etc.
• Distribution of outputs attributed to growth unequally due to high population in some states.

Measures taken to ensure backward states catch up to the growth wagon:

• Constitutional provisions: Special provisions and attention to regions with special needs ensured by Article 371(A-J) which include creation of development boards, facilities for technical education, vocational training, employment in public services etc. most of them directed by the President of India.
• Implementation of policies w.r.t the NITI Aayog’s Aspirational Districts Programme with a focus on 115 districts which fare poorly in health, education, skill development etc, especially in backward districts of BH, UP and MP.
• Encouraging outcomes through competition rather than by allocating additional funds: The states have been asked to be considered as sites of potential transformation rather than poor or backward areas.
• Higher central financial assistance in schemes: 90:10 ratios in North-Eastern states to strengthen capacity.
• Setting up of IITs and other higher quality professional institutions: For ex: IIT in North Karnataka region.
• Increasing regional connectivity in transport infrastructure: UDAN scheme, expressway, Industrial corridors etc.
• Facilitation of incentives and attractions to private sector: To avoid shunning out from investment in backward areas.
• Schemes: Increasing penetration of Gram Swaraj Abhiyan aimed at improving socio-economic indices in villages lagging behind in key indices.
• Concentration of Mudra loan scheme in underprivileged districts to help create jobs.
• Other schemes like Pradhan Mantri Ujjwala Yojana, DDUGJY, Saubhagya scheme, Swachh Bharat Abiyan directly or indirectly help in mainstreaming some of the most backward areas in India.

Conclusion:

Natural endowments and constraints, initial stages of development, mobility of resources, and a host of other such factors influence growth patterns of regions within national economies. Effective target-based, region specific measures can ensure mainstreaming all regions in the economic growth of India, with reduced disparities.