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Regional Development and Planning in India

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Bikramaditya Kumar Choudhary

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Development perspectives

Regional
Development and
Planning in
India

32 July-August 2014  Geography and You

 Development, no matter how one defines it brings disparity, though its scale and
nature could be varied. A broader historical overview that maps progress in living
standards is imperative to understand the development discourse.

Story Bikramaditya Choudhary

Port Blair, Andaman

Geography and You  July-August 2014 33

T
he understanding of development
depends on the way it is defined. In
1995 Jonathan Crush, a global devel-
opment studies professor at Queen’s,
formulated in his book ‘Power of
Development’ that development depends on
who defines it, and for whom. As the origin of
the concept of development lay in the western
world, it remained Eurocentric for a consider-
able period and laid significant emphasis on the
‘capitalist form of growth’, or in the ‘growth of
national income’. Regional development was thus
interpreted differently in different contexts; the
only convergence was at a point where ‘regional
development’ dealt with the process at the spatial
scale.
It is important to understand why certain indi-
viduals, group and regions are poor compared to
others. The reason for existing low levels of eco-
nomic performance and lower levels of standard
of life are often believed to be complimentary to
each other.
Gunnar Myrdal, a Swedish Nobel-laureate
economist, 1957, summed up ‘poor are poor, as
they are poor’; explained later as the vicious cycle
of poverty. The existing gaps are the result of
market-oriented policy of the governments across
the world. The evidence from China presented
in 2004 by Sylvie Demurger et al. in their paper
‘Geography, economic policy and regional devel-
opment in China’, Harvard Institute of Economic
Research, reveals that the coefficient of variation,
a measure of disparity, across provinces was lower
before adopting the open-door policy; however
the coastal areas benefited as compared to the rest
of the country.
As noted in 2003 by economist R Mackay, in his
paper ‘Twenty-five years of regional development’
published in Regional Studies, poor laws were a
debilitating aspect of policy making, which over
a period of time allowed the northern regions of
United Kingdom to lose their industries due to the
exhaustion of coal mines and also due to the shift
in the mechanical source of energy—from coal to
oil.
In the aftermath of the great depression in 1929
and 1930, which affected most of the capitalist
economies, the concept of laissez-faire, a policy
of minimum governmental interference in the
economic activities of individuals and society,
34 July-August 2014  Geography and You
was opposed and active state intervention in re-
structuring of the economy was slowly accepted.
This acceptance provided a ready market for pro-
duction units. The new economic order based on
Keynesian ‘demand management’, D Roosevelt’s
‘new deal’, and Joseph Stalin’s model of ‘centralised
planning’, especially top-down approach, started
restructuring the economic space across the world
at national and sub-national order. The initiation
of regional planning in post independence India
has to be placed in this context to understand the
intricacies of the structure of the state, the domi-
nant group, the capitalist production system and
the people spread across regions of India.
Independent India began its journey under the
rubric of a mixed economy. The years between
1952 and 1992 are normally categorised into three
periods namely: ad-hoc period (1952-55), period
of initiation (1956-67)’ and period of consolidated
planning (1968-91).
The year 1991 remain a watershed in the eco-
nomic history of India, when the ‘open economy’
format was adopted, supposedly based on global
competition. Whether India benefited or not;
who in India benefited; who accumulated wealth
by dispossessing whom; which class emerged as a
ruling class; whether the character of the ruling
class remain the same across the country or be-
came divergent across the nation-state; all have a
bearing on planning processes and strategies.
The focus here is on the changing character of
planning and its implications for the economy and
people in the last 20-25 years. The last two-three
decades of planning could be termed as ‘period of
rhetoric’, as this period has seen loud claims but
little action. The analysis of the plan and non-plan
expenditure indicates that successive years have
witnessed a systematic withdrawal of universal
welfare schemes to minimise the fiscal deficit and
to meet the global standard of cutting subsidy.
The debate began with a general acceptance
that the process of development does not start at
the same point of time and that means that some
regions are behind in the process. According to
multiple scholars like August Losch, Gunnar
Myrdal and Francois Perroux, the reasons for
this (non)uniformity is natural conditions and
historically created differentiation that lead to
comparative advantage based on resource endow-
ment.
 Development in the contemporary world is
dominated by neo-liberal states that result in
more and more regions getting excluded.
The choice of a specific location for the begin-
ning of growth impulses depends on resource
endowment, cultural factors, concessions and
rebates by the state and so on. The history of
Indian planning since the third five-year plan sug-
gests that new industries, especially public sector
undertakings (PSUs), were located in relatively
backward regions with the imaginative outcome
of bringing growth across the regions and to cre-
ate a kind of ‘complex interaction across units of
production’. The outcome, however remains far
from bridging the gap between the core regions
and the hinterland.
Development in the contemporary world is
dominated by neo-liberal states that promote
decentralisation, deregulation, liberalisation and
a virtual global economy, resulting in more and
more people and regions are getting excluded.
A major concern in development economics
is to find a satisfactory answer to a basic ques-
tion—why do different regions (countries/states/
districts) grow differently, leading to varying
degrees of income and expenditure inequalities
and poverty. However, there is no single answer,
as there could be country or region specific factors
such as governance, institutions, culture, method
of intervention and so on, that play a dominant
role in determining the growth path. The great
inequality amongst different regions in terms
of economic performance and the distribution
of benefits of such economic development is an
undisputed reality. There are glaring examples of
various kinds of disparities at international, inter-
state and interregional levels. The concentration of
development in terms of accumulation and afflu-
ence in a few parts of the world or in different parts
of a nation continue to remain the norm rather
than the exception across the globe. Scholars like
M H Suryanarayana, Indira Gandhi Institute of
Development Research, Economics Programme,
opine that, “tentative estimates, if valid, indicate
that the growth process between 1993-94 and
2004-05 has bypassed the majority and was not
inclusive and no cross-sectional evidence to be-
lieve that growth in India is inclusive”. P P Ghosh
et al., Centre for Economic Policy and Public Fi-
nance, Asian Development Research Institute, in
their article ‘Political Implications of Inter-State
Disparity’ published in 2009 in the Economic and
Political Weekly, 2009, points towards skewed
development and growing inter-state disparity.
S Mahendra Dev et al., Centre for Economic and
Social Studies, in their book ‘India’s Development:
Social and Economic Disparities’ published in
2008 note similar findings about rural poverty
ratio across states.
It is also true that such disparities are larger in
the poor countries and regions and, as Myrdal
noted, inequalities would be larger at the outset of
the development process. But, the reason behind
growing inequalities in a post-industrial phase
needs to be addressed anew. According to global
economists, even in the most developed countries
like USA or the industrial countries of Western
Europe, the same scenario was observed a few
decades ago, and is today on the increase again.
The process of development is said to begin
with the creation of external demand, surplus,
and, a comparative advantage. These, in combi-
nation, are pre-conditions for a classical as well
as neo-classical conception of development. In
this scenario, relative deprivation of a region
is bound to increase, and it has been suggested
time and again that if the state intervenes or
when decentralisation begins, these disparities
are likely to decrease. The reasons for disparities
have been cited as multifarious, ranging from
race to environmental determinism and resource
endowment.
In United Kingdom, up to the mid-1970s, there
was a trend towards greater regional equality in
the distribution of income and wealth, but the
next 25 years saw increasing regional inequali-
ties. A similar situation has been reported from
Geography and You  July-August 2014 35

The regional dimension is important to address specific kinds of deprivation at different sites of exclusion
like dam sites, highway sides, special economics zones , industrial sites, etc.
the USA where, income inequality and concen-
trated disadvantage have been on the rise since
the 1960s, as the affluent and poor are becoming
more concentrated than ever. India too, is facing
similar conditions.
The idea of development in India was built
on the Nehruvian concept of modernity that
was based on technological advancement and
industrialisation. The lack of profitability of
public sector industries has been partly ascribed
to the low rate of capacity utilisation – Bhilai, 65
per cent; Rourkela 48 per cent; Durgapur 30 per
cent during the 1970s. K Kalirajan et al. in their
2003 paper ‘Income inequality and convergence
of income across Indian States’, and U Sankar’s
‘Economic reforms and liberalisation of the India
economy,’ 2003, highlight that it was the govern-
ment’s inability to maintain a high-rate of public
investment and its tendency to shift its pattern of
expenditure away from development-oriented
projects that has had an adverse effect on the prof-
itability of industries. This resulted in a new form
of concentration of industries in different parts
of the country and the regions where such indus-
36 July-August 2014  Geography and You
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Traffic halt during a rally against special economic zones in Singur, West Bengal.
tries were located become deprived, with lots of
unemployed or retrenched labour force with old
technical know-how, unsuitable for employment
in the new industries. Limitation of technological
change, missing link between production of raw
materials and assembly of final product along
with imbalance in industrial development has
led to concentration of production and trading
activities in states which have traditionally de-
veloped infrastructural facilities for large-scale
production, manpower training and financial
transaction.
The regional dimension is important to address
specific kinds of deprivation at different sites of
exclusion like dam sites, highway sides, special
economics zones , industrial sites, etc. In different
parts of the country, the model of socialism, the
mode of oppression, the mechanism of margin-
alisation and processes that produce poverty and
exclusion have been divergent.
The author is Assistant Professor, Centre for the Study of
Regional Development, Jawaharlal Nehru University,
New Delhi. bkchoudhary@mail.jnu.ac.in