Regional

ImbalanceBusiness Environment| Sujeet Kumar

Topics to be covered• Concept of Regional Imbalance

• Indicators of Regional Imbalance

• Causes of Regional Imbalance

• Measures to Remove Regional Imbalance

• Tenth and Eleventh Five year Plan and Regional Imbalance

• Survey Report

• Review

Concept of Regional Imbalance• “The co-existence of relatively developed and economically

depressed states and even regions within each state is known as Regional Imbalance.”

• Regional imbalance may be;– Natural

– Man made

– Inter-state or intra-sate,

– Total or sectorial,

• “Economic Backwardness” of a region indicated by symptoms like high population pressure on land, excessive dependence on agriculture, absence of large-scale urbanization, low productivity in agriculture and cottage industries, etc.

Indicators of Regional Imbalance• Population

• Per Capita Income

• Growth Rate (Net State Domestic Product)

• Infrastructure

• Physical Quality of Life– Infant Mortality Rate

– Literacy Rate

Indicators of Regional Imbalance• Population

Forward States (48% of Total Population)

Population as per 2001 census

Punjab 2,43,58,999Maharashtra 9,67,52,247Haryana 2,11,44,564Gujarat 5,06,71,017West Bengal 8,01,76,197Karnataka 5,28,50,562Kerala 3,18,41,374

Tamil Nadu 6,24,05,679Andhra Pradesh 7,62,10,007

Backward States (42% of Total Population)

Madhya Pradesh 6,03,85,118Assam 2,66,55,528Uttar Pradesh 16,60,52,859Rajasthan 5,64,73,122Orissa 3,68,04,660Bihar 8,29,98,509

Indicators of Regional Imbalance• Per Capita Income

Forward States Per Capita Income at current prices

(2005-2006) in Rs.Rank

Punjab 36759 3Maharashtra 37081 2Haryana 38832 1Gujarat 34157 4West Bengal 25223 9Karnataka 27291 7Kerala 30668 5Tamil Nadu 29958 6Andhra Pradesh 26211 8

Average 31798  Backward States

Madhya Pradesh 15647 3Assam 18598 6Uttar Pradesh 13262 2Rajasthan 17863 5Orissa (2004-2005) 16306 4Bihar 7875 1

Average 14925  

Indicators of Regional Imbalance• Growth Rate (Net State Domestic Product)

Forward States Annual Average

Growth Rate 1990-91 to 2004-05

Rank

Punjab 4.37% 11Maharastra 6.06% 4

Haryana 5.37% 8Gujarat 6.79% 3

West Bengal 6.88% 2Karnataka 6.91% 1

Kerala 5.86% 5Tamil Nadu 5.26% 9

Andhra Pradesh 5.65% 6Backward States    Madhya Pradesh 1.78% 14

Assam 3.18% 12Uttar Pradesh 2.79% 13

Rajasthan 5.11% 10Orissa (2004-2005) 5.52% 7

Bihar -0.99% 15

Indicators of Regional Imbalance• Infrastructure

Forward States Infrastructure Development

Index 1999Rank

Punjab 187.6 1Maharashtra 112.8 6Haryana 137.5 4Gujarat 124.3 5West Bengal 111.3 7Karnataka 104.9 8Kerala 178.7 2Tamil Nadu 149.1 3Andhra Pradesh 103.3 9Backward States  Madhya Pradesh 76.8 14Assam 77.7 13Uttar Pradesh 101.2 10Rajasthan 75.9 15Orissa 81 12Bihar 81.3 11

All India 100  

Indicators of Regional Imbalance• Physical Quality of Life

– Infant Mortality Rate

Forward States

Infant Mortality Rate

(per thousand) in 2005

Rank

Punjab 44 4Maharashtra 36 2

Haryana 60 9Gujarat 54 6

West Bengal 55 7Karnataka 50 5

Kerala 14 1Tamil Nadu 37 3

Andhra Pradesh 57 8Madhya Pradesh 76 15

Assam 68 11Uttar Pradesh 73 13

Rajasthan 68 11Orissa 75 14Bihar 61 10

All India 58  

Indicators of Regional Imbalance• Physical Quality of Life

– Literacy Rate

Forward States

Literacy Rate (2001)

Total Rank Male Rank Female Rank

Punjab 69.9 5 75.6 10 63.6 4Maharashtra 77.3 2 86.3 2 67.5 2

Haryana 68.6 7 79.3 5 56.3 8Gujarat 70 4 80.5 4 58.6 6

West Bengal 69.2 6 77.6 6 60.2 5Karnataka 67 8 76.3 9 57.5 7

Kerala 90.9 1 94.2 1 87.9 1Tamil Nadu 73.5 3 82.3 3 64.6 3

Andhra Pradesh 61.1 12 70.8 13 51.2 10Madhya Pradesh 64.1 10 76.8 7 50.3 12

Assam 64.3 9 71.9 12 56 9Uttar Pradesh 57.4 14 70.2 14 43 14

Rajasthan 61 13 76.5 8 44.3 13Orissa 63.6 11 75.4 11 51 11Bihar 47.5 15 60.3 15 33.6 15

All India 65.4   76   54.3  

Causes of Regional Imbalance• There are certain deterrent factors which come in the way of rapid

development of a region; most important of them are:– Geographical Isolation,

– Inadequacy of economic overheads like transport, labour, technology, etc

• Pre-independence period

• Post-independence period

• Geographical Factors

• Locational Preferences

Measures to Remove Regional Imbalance

General Measures:– transfer of financial resources from the Centre to the states.

– Special area development programs

– Measures to promote private investment.

Measures to Remove Regional Imbalance

• Backwardness and Resource Transfer

Plans

Total assistance in all states (Rs.

Crore)

Total assistance to Backward States (Rs.

Crore)

Percentage of Assistance of

Backward States

Sixth Plan(1980-85) 16560 7590 46%Seventh Plan (1985-90) 31420 13200 42%Eighth Plan(1992-97) 93830 35160 37%

Ninth Plan (1997-2002) 185260 69990 38%Tenth Plan (2002-07) 254100 91080 36%

Measures to Remove Regional Imbalance

• Special Area Development Program– Specific Plan schemes to develop-prone areas– The Eleventh finance Commission identified criterion for resource

transfer,• the relative distance of the per capita income of the state with the income of the state with highest per capita

income • index of infrastructure development • On the basis of new formula, backward states and special category states, taken together would receive

61.2% of total resource transfer.

Measures to Remove Regional Imbalance

• Initiative to promote investment in backward areas– Central Government Incentives:

– Income Tax Concession:– Central Investment Subsidy Scheme:– Transport Subsidy Scheme:

– State Government Incentives:– Provision for developed plots with water and power with no-profit and no-loss basis– Exemption from payment of water charges for some year– Interest fee loans on sales tax dues– Exemption from payment of property taxes for some years– Monetary Assistance from State Financial Corporation, State Industrial Development Corporation

(SIDCO) etc.

– Concessional Finance by major financial institutions:– A lower rate of interest on rupee loans (9.5% as against 11.5%),– A longer period of repayment (generally 15 to 20 years, as against 10 to 12 years),– Participation in the risk capital or debenture issues,– Charging only half the normal rate of underwriting commission, waving of commitment charges, etc.

Tenth and Eleventh Five Year Plan and Regional Disparities

• Tenth Five year plan for less developed States– High level of Capital investment

– Initiative towards the better governance and institutional reforms to make the targeted investment effective.

– Rashtriya Sam Vikas Yojana- RSVY (national Equal Development Plan) to support the development initiatives in backward states and regions.

• Eleventh Five year plan for less developed States– Pradhan Mantri Gram Swaranjayanti Swarozgar Yojana (PMGSY)

– Indira Awas Yojana

– National Rural Health Mission (NRHM)

– Sarv Shiksha Abhiyan

– Supplementary nutrition program

Survey Report

• North: Racing up

Northern ZoneOverall Rank Agriculture

Consumer Markets

Primary Education

Law & Order

Primary Health Infrastructure Investment

Budget & Prosperity

Delhi 1 3 2 4 4 1 1 2 2Chandigarh 2 4 1 2 1 8 4 1 1

Punjab 3 1 3 5 6 4 2 4 3Himachal Pradesh 4 8 4 1 2 2 3 3 4Haryana 5 2 5 7 5 7 5 5 5

Uttrakhand 6 7 7 3 8 5 7 6 7Jammu & Kashmir 7 9 6 6 7 3 6 8 6

Rajasthan 8 6 8 8 3 6 8 7 8Uttar Pradesh 9 5 9 9 9 9 9 9 9

Survey Report

• East: Depressing

Eastern zone

 Overall Rank

AgricultureConsumer Markets

Primary Education

Law & Order

Primary Health

Infrastructure InvestmentBudget & Prosperity

Mizoram 1 7 2 2 1 3 2 1 1Sikkim 2 9 3 1 3 1 3 5 5

Arunachal Pradesh

3 10 4 7 11 4 5 2 2

Nagaland 4 11 1 3 7 5 8 3 3Manipur 5 4 9 4 12 2 7 10 6Tripura 6 5 6 5 9 7 12 8 4Assam 7 12 8 8 5 9 6 6 9

Meghyalaya 8 6 5 6 13 6 11 4 7West Bengal 9 1 7 10 6 8 1 12 10Chhattisgarh 10 8 10 11 2 12 9 7 8

Orissa 11 3 12 9 4 10 4 11 12Jharkhand 12 13 11 12 8 11 13 9 11

Bihar 13 2 13 13 10 13 10 13 13

Survey Report

• South: Stalling

Southern ZoneOverall Rank Agriculture

Consumer Markets

Primary Education

Law & Order

Primary Health Infrastructure Investment

Budget & Prosperity

Puducherry 1 1 1 3 2 7 6 1 1Tamil Nadu 2 2 5 5 4 1 2 2 4

Kerala 3 7 4 4 1 2 1 5 5Andaman &

Nicobar 4 6 2 2 3 5 5 7 3Karnataka 5 5 6 6 5 3 3 3 6

Lakshadweep 6 3 3 1 6 6 7 6 2

Andhra Pradesh 7 4 7 7 7 4 4 4 7

Survey Report

• West: Stagnant

Western ZoneOverall Rank Agriculture

Consumer Markets

Primary Education

Law & Order

Primary Health Infrastructure Investment

Budget & Prosperity

Goa 1 1 1 1 4 1 2 1 1Gujarat 2 2 5 5 2 4 3 3 4

Maharastra 3 3 4 3 3 2 1 4 5Daman & Diu 4 5 2 2 5 6 5 2 2

Dadar & Nagar Haveli 5 6 3 4 6 3 6 5 3

Madhya Pradesh 6 4 6 6 1 5 4 6 6

Review

• Regional Disparities hinder the national development

• Overall development of the states can bring the better future and prospects

• Identification of the lagers and the concerned area is very vital for the removal of disparities

• A well developed planning and strategy can remove the disparities

• Resource transfer is an important weapon to fight against the regional disparities.