India is a vibrant country with quite an impressive economic growth profile and as expected, improvement in economic growth and per capita income has translated, at least partly, into reduction in the level of poverty in the country. It is a fact that there has been a secular decline in the share of poor in the population.
However, there exists a wide spread disparities in the levels of social-economic development between the different regions of the country. The huge differences in living standards as measured by per capita incomes, across the States of India range from 12,000 rupees per head in Bihar to nearly 1,00,000 rupees per head in Goa.
They are the product of history and past growth experience. There are also other related disparities in the levels of education, literacy, health, infrastructure, population growth, investment expenditure and the structure of regions.
1. Historical Factors
Historically regional imbalance in India started from its British regime. British industrialist mostly preferred to concentrate their activities in two states like west Bengal and Maharashtra and more particularly to their metropolitan cities like Kolkata, Mumbai and Chennai. They concentrated all their industries in and around these cities neglecting the rest of the country to remain backward.
2. Geographical Factors
The difficult terrain surrounded by hills rivers and dense forest, leads to increase in the cost of administration, cost of development projects, besides making mobilization of resources partially difficult. Adverse climate and floods are also responsible factors for poor rate of economic development of different regions of the country as reflected by low agricultural productivity and lack of industrialization. These factors have resulted in uneven growth of different regions of India.
The states with well-developed basic infrastructure such as power, water, roads and airport attracts the big investment projects and so has witnessed a very high growth rate. The poorer states on other hand lacking the basic infrastructure fails to attract private investments. This has accentuated the problem of inequality in the distribution of income and concentration of economic power.
4. Decline in Public Investment
In the new economic policy the Government has been continuously limiting its role with respect to participation in economic activity and has given more space to the private sector. There has been a steady decline in the public investment. This has adversely affected the poorer states. Since the public investment is a major contributor to growth of these States through bulk investments on irrigation, power and social sector projects decline in the same has adversely affected the process of development of many regions.