September 9, 1 9 6 1 THE ECONOMIC WEEKLY

Conceptual Framework of Regional Planning

S R Sarna
Economic diversity, if not properly balanced and controlled, creates a structure of expanding, stag-
nating and regressing regions within a country, notwithstanding political unity and cultural integration.
These regional inequalities are a necessary concomittant of the self-perpetuating processes of regional
specialisation visualised in the Weberian theory of location.
The micro approach to problems of location is concerned with the location of a particular industry
or an industrial unit. In the dynamic approach to spatial economics, however. it is the region or the
entire industrial structure of a region which is the unit. Such an approach is concerned with all the
renditions which must be fulfilled to move a region from its position of static equilibrium and indus-
trialise it in a balanced manner.
Planning for regional development thus proceeds from a study of the various alternative possibilities
of evolution for a particular region, and involves the selection of those policies and programmes which are
likely to reduce interregional inequalities to the minimum.

THE spatial dimension in the the p o l i t i c a l divisions, these. re- tra-regional behaviour, such as the
concept of state reveals a for- gions do not respect political desire and willingness to w o r k , to
mative "integration-disintegration" boundaries and s p i l l over many consume, to procreate" 2 .
process to the extent that whereas f r o n t i e s . leading to and resulting
the State can be visualised as an in problems connected w i t h region- These parameters of structural
integrated and composite entity, alisation and regionalism. Perhaps, differences and functional divergen-
based upon the fundamental t e r r i - it was in view of these problems cies, tend to create and m u l t i p l y
t o r i a l u n i t y and the homogeneity that August Loesch defined region differential behaviours or motiva-
of national l i f e , the region can be as a " system of various areas, an tions and promote divergent forces
in the socio-economic sub-universe,
assumed as a disintegrated p r i m a r y organisation rather than an o r g a n " 1
u n i t , rooted in the t e r r i t o r i a l diver- which transmit variegated stimu-
Structural Dissimilarities
sity and heterogeneity of national lants to and result in dissimilar
The diversity in the patterns of
life. Under the superstructure of reactions in the already diverse
regional economies is inherent in
the state, the pattern of region- patterns of regional economies. Ac-
and inspired by various structural
f o r m a t i o n , arising f r o m a scatter cording to Gunar M y r d a l , "if we
dissimilarities and inequalities in
of p o p u l a t i o n tied to a scatter of use such a simple measure of re-
respect of areas of the region, size
land and natural resources, may gional inequality as the p r o p o r t i o n
of the population. geographical
either c o n f o r m to a natural sub- of the total p o p u l a t i o n of a country
situation and natural endowments.
d i v i s i o n of territories according to l i v i n g in a region where the average
These relative differences in regional
a d m i n i s t r a t i v e convenience, or may income is less than two-thirds of
characteristics and formations are
occur as a sub-structure of space- the national average, we find that
f u r t h e r accentuated by functional
units of various forms and this p r o p o r t i o n amounted to only a
divergencies in productive efficiency
functions. few per cent in Great B r i t a i n and
of the w o r k i n g population volume
Switzerland, to some 10 per cent in
of employment opportunities, food
This regional complex, as a re- such countries as Norway and
and non-food a g r i c u l t u r a l output,
sult of the areal-disintegration of France, and to about one-third in
u t i l i z a t i o n of mineral and other Italy T u r k e y and Spain." 3
the composite slate, may emerge as
natural resources power-supply and
an interwoven network of either
fuel-resources, rate of industrial and Regional Inequalities
naturally-determined regions like
technological progress, m o b i l i z a t i o n Economic diversity, if not pro-
rainfall regions (or the broader
of i n t e r n a l financial resources for perly balanced and checked, creates
h y d r o l o g i c a l regions) soil-regions or
capital f o r m a t i o n and development a m u l t i - d i m e n s i o n a l regional-struc-
geographical regions. crop-regions
of economic overhead capital. Ac ture of expanding, stagnating and
(or the broader flora and fauna
c o r d i n g to Haavelmo "the structu- regressing areas w i t h i n a country,
regions) climate and meteorological
r a l co-efficients of the system could notwithstanding p o l i t i c a l u n i t y and
regions, mineral-regions and geo-
physical regions, or man made re- he grouped into the f o l l o w i n g four cultural integration. " T h e p r o b l e m
gions like administrative districts, categories (a ) parmeters describing of inequalities," according to Gunar
zones or regions, or lastly the the size of the regions, the dis- M y r d a l , "then, becomes a p r o b l e m
population-based regions like posable natural resources, climatic of the "different rates of progress.
conditions etc; ( b ) technological between the regions of the coun-
ethnological and cultural regions
parameters that describe the input- t r y . " 4 A n d these different rates of
and l i n g u i s t i c regions. ( T h o u g h a l l
output relations, under w h i c h the progress are u n i v e r s a l ; in advanced
types of regions, as units of spatial-
region has to operate: (c) para- countries, there are not a l l equally
d i v i s i o n , are l i n k e d w i t h some eco-
meters related to the presence, the advanced regions but comparatively
nomic f u n c t i o n or purpose a clear-
activities and the decisions of other more or less advanced regions.
cut economic region is a rare
accident). To the extent that these regions, but relevant to the activi- whereas in under-developed or
functional divisions are found ties of the region concerned; and, b a c k w a r d countries, there are not
generally not in c o n f o r m i t y w i t h ( d ) parameters characterizing i n - all equally b a c k w a r d regions hut

1434
THE ECONOMIC WEEKLY
comparatively more or less back-
w a r d regions. In B r a z i l , the Mate
of Sao paulo has p u l l e d far ahead
of other states whereas M i n a s Ge-
raes, Parana or Matto Grosso are
certainly far behind. A c c o r d i n g to
Professor T W Schultz, "while
Ganadu is beset by low p r o d u c t i v i t y
per worker and much poverty at
one goes east, w i t h i n the U n i t e d
States, it is the south that has been
substantially by-passed by economic
development." ' Not o n l y that. In
United States, regional economic
equalities arc found even w i t h i n the
States, to the extent that the nor-
them parts of M i c h i g a n , Wisconsin,
and Minnesota have been serious
" p r o b l e m areas'" compared to the
rest of these States. In I t a l y , in-
dustry in the Northern Provinces
had such a lead and was so better
developed that it dominated the
national market and suppressed the
industrial growth in Southern I t a l y .
I n d u s t r i a l g r o w t h in the poorer
provinces of Southern Italy shunted
off more or less by the p u l l i n g
d o w n of internal tariff-walls after
the political unification of Italy in
the last century. Gunar M y d r a l has
concluded that developments in
Sweden, as also in U S A, have not
been such as to draw the whole
country into a more or less equal
and simultaneous expansion process.
These regional inequalities and
dissimilarities, which pave the way
for and end in an entangled cobweb
of m u t l i - v a r i a t e commodity-balan-
ces, are a necessary concommitant
of self-perpetuating processes of
regional specialization. visualized
in the W e b e r i a n theory of location.
The W e b e r i a n theory, w h i c h is a
microscopic approach to spatial
economics, stipulates that the loca-
t i o n of industry, or to be more pre-
cise the location of an industrial
unit or firm, in a given region, is
governed by the loci of raw materi-
als, energy resources, labour supply
and the market, all of them being
geographically fixed f r o m the p o i n t
of view of the i n d i v i d u a l industry.
In this context, industrial localisa-
tion has been defined by Professor
Florence as the local concentration
of one i n d u s t r y compared w i t h the
distribution of industries as a persed industries can be measurably-
whole, and a co-efficient of localisa-
tion, based on regions, indicates
the degree of such localisation of
a l l industries. 6 The dispersion of
markets w i t h i n a region is indicated
by the population-density, and the
connected " density-effect" deter-
mines the concentration of larger
plants or greater specialisation in
densely-populated local markets or
i n d u s t r i a l districts. This location
theory, on a microscopic level, em-
phasizes the locational co-relation
between as well as adjustment of
geographically-immobile factors and
geographically-mobile factors, or
size and dispersal of the plant.
T h i s microscopic u t i l i t a r i a n appro-
ach has p r o v i d e d a vigorous defence
or justification, howsoever weak in
the ultimate analysis, to the concept
of comparative costs based upon
natural or acquired or other advan-
tages, at a particular site, which
tend to be self-reinforcing in the
process of locational agglomeration,
and if not checked in time lead to
the emergence of industrial con
centration and slums. But this
theory is o b l i v i o u s of the scope of
macro-economics in the regional
complex or the aggregative, dyna-
mic forces s t r i v i n g to change the
quasi-stable e q u i l i b r i u m in regional
economies.
Measurement and Analysis
Professor Sargant Florence has
introduced three new concepts in
spatial economics, for the statistical
measurement and analysis of the
degree and incidence of location as
well as localisation. The " location-
quotient", for any industry in any
region, indicates the degree of con-
centration, and "is obtained by
d i v i d i n g the percentage of workers
in that industry f o u n d in the region
by the percentage of total workers
found there." The "co-efficient of
l o c a l i z a t i o n " for a particular indus-
t r y , measures the degree of local
concentration of that industty
compared with the distribution
of industries as a whole. The co-
efficient of localization or local con-
centration "is the sum ( d i v i d e d by
100) of the phis deviations of the
regional percentages of workers in
the particular industry f r o m the
corresponding regional percentage
of workers in all industry." This
indicates the propensity of
particular industry for localiza-
t i o n and on the basis of that "dis-
distinguished by a low co-efficient of
localization, ubiquitous industries by
a certain m i n i m u m of location in
every r e g i o n . " T h e "co-efficient of
linkage" or geographical association
1435
September 9, 1961
measures the location of a particu-
lar industry compared to that of
another and signifies the extent to
w h i c h two industries tend to be
located in the same region o w i n g to
related technical processes or mutual
inter-dependence. T h i s linkage or
association, between two industries
A and B "compares A's; percentage
of workers in different regions, not
with that of industry in general, but
w i t h industry B's percentage." These
concepts envisage the dimensions of
the static e q u i l i b r i u m in spatial
economics and the inter-regional
relations of regional economies.
The dynamics of the macroscopic
approach to spatial economies take-
up an altogether different co-rela-
tion between the multi-variable for-
ces and factors influencing the entire
intra-regional economic activity as
well as affecting the inter-regional
terms of trade. In the macroscopic
theory, it is the region or the entire
i n d u s t r i a l structure of a region which
is the unit not the i n d i v i d u a l plant
or an i n d i v i d u a l site. This aggrega
l i v e concept, infused w i t h a dynamic
approach, envisages the whole pers-
pective and studies all those con-
ditions w h i c h must be fulfilled he-
fore a region can change its static
e q u i l i b r i u m , become industrialised in
a balanced manner and can reach
a take-off towards integrated econo-
mic g r o w t h , P r o m the point of in-
dustry as a whole, the market and
the labour force are not fixed and
are determined by the industrial
structure of the region and the i n -
dustrial structure of the region is
determined by the mobilities of ma-
terials and resources w h i c h are fixed
loeationally. Professor J H Dale
assuming a fixed co-efficient of pro-
duction has concluded that "the
locational attraction of any mate
r i a l thus varies directly w i t h the
amount of that m a t e r i a l used in
p r o d u c t i o n , and inversely w i t h i t s
m o b i l i t y , " subject to the c o n d i t i o n
that "a region w i l l be able to pay
for its imports by exports either of
its staple p r i m a r y products or its
manufactures." 7 But, insufficient mo-
a b i l i t y of resources makes it impos-,
sible to cancel one specific discre-
pancy w i t h the other and tends to
fluctuate in such a way that the ag
gregative magnitudes w i l l not stay
in balance. To remove these defi-
ciencies and imbalances, structural
shifts, and not marginal shifts, are
needed, so that specialised resources
September 9, 1961
may change their regional and oc-
cupational specialization in response
to changes in demand.
Dynamic Equilibrium
( m e n the desideratum o f chang
i n g "the quasi-stable e q u i l i b r i u m of
under-development" in spatial eco-
n o m y , the time-path of progress
tends to introduce a d y n a m i c ele-
ment of resource-mobility i n t o the
macro-statics of the economy of a
region, as progress is inevitably
associated w i t h internal shifts in the
structure of p r o d u c t i o n and in the
structure of regional economy. Ac-
c o r d i n g to Professor Fellner, 8 the
condition o f dynamic e q u i l i b r i u m
starts w i t h the i m p r o v e m e n t pro-
cess to offset the d i m i n i s h i n g re-
turns, as persistent d i m i n i s h i n g re
turns or d o w n w a r d shifts of the
m a r g i n a l efficiency schedule are in-
c o m p a t i b l e w i t h sustained g r o w t h
and also w i t h f u l l realization of the
capital f r a m e w o r k . The consequen-
ces of this improvement process or
economic development are not o n l y
a rise in the real output per unit of
i n p u t of human effort but also to
stop the chain-reactions of what
Professor Gunar M y r d a l has called
"backwash effects", whereby con-
tracting forces, w o r k i n g t h r o u g h
m i g r a t i o n , capital movement, trade,
and the whole gamut of other social
relations, tend to make regions
either stagnating or regressing. The
dynamics of increasing returns, or
spread effects, that is reversing the
gears of backwash-effects, may well
lead to an i n d u s t r i a l r e v o l u t i o n . In
the words of Professor T W Schultz.
"the broad sweep of the i n d u s t r i a l
revolution may well be viewed as a
l o n g , secular boom in economic
possibilities." 9 These possibilities
are concerned w i t h e l i m i n a t i n g i n -
stability and imbalance in the le-
giorial economy, i n j e c t i n g m o b i l i t y
in the subsistence nature of econo-
m i c a c t i v i t y , reshaping and expand-
i n g the productive capacity of a
region, m o b i l i z i n g the manpower at
full-employment level and material
resources at f u l l u t i l i z a t i o n capacity,
u n d e r t a k i n g a composite develop
ment and socio-economic i n t e g r a t i o n
of the region under a well-coordi-
nated and balanced inter-regional
programme.
In the final analysis regional
development proceeds f r o m a study
of the "various alternative possibi-
lities of e v o l u t i o n " f o r a given re-
g i o n , i n v o l v i n g a selection of those
policies and programmes w h i c h are
l i k e l y to reduce the reducible inter-
regional dissimilarities by balancing
the regional input-output ratios and
inter-regional commodity-balances
and by r e m o v i n g the prevalent loca-
tional imperfections t h r o u g h disper-
sal of industries, diversification of
o u t p u t and decentralization of con-
t r o l . A p r o g r a m m e of regional de-
velopment, a i m i n g at long-range
changes in the p r o d u c t i o n - f u n c t i o n ,
is a selective though dynamic busi-
ness. as it has to make i n i t i a l p o l i c y -
decisions concerning choices between
slow but balanced g r o w t h and r a p i d
but unbalanced g r o w t h , between
comparative advantages at present
and c u m u l a t i v e advantages i n f u t u r e ,
between concentrated development
w i t h external economies as well as
i n d u s t r i a l slums and dispersed deve-
lopment, w i t h healthy surroundings
and no external economies, between
specialization of output haunted by
business fluctuations and diversifi-
cation needing huge capital o u t l a y .
The resultant choices depend upon
certain behaviouristic parameters,
certain technological parameters,
and on a set of i n i t i a l conditions of
the system. A comprehensive re-
gional development p r o g r a m m e , at-
tuned to a commensurate expansion
in the regional input-capacity and
the effective demand f o r regional
o p t i m u m output, strives h a r d to
make the i n i t i a l push and then
spread the contagion step by step
and stage by stage, under pre-de-
termined p r i o r i t i e s , in order to
achieve a secular rise in regional
real income, " r e s u l t i n g both f r o m
productive activities w i t h i n the re-
gion and f r o m t r a d i n g activities be-
tween the regions."
Executing the Programme
But the question arises whether
such a composite and gigantic pro-
gramme of regional development
should be framed and executed by
inducement or by d i r e c t i o n , under
a free economy or a planned eco-
nomy. The case for inducement,
according to Professor W A Lewis, 1 0
stands on the g r o u n d that " w h e n we
are seeking to develop particular
regions, it is better to proceed by
inducement than b y d i r e c t i o n . . . I f
i n d u s t r y w i l l not come to an area
even when special efforts are made
to reduce the cost of w o r k i n g there,
it is dangerous to d i r e c t it there,
f o r there must be something basi-
cally w r o n g w i t h the area." B u t
1436
THE ECONOMIC WEEKLY
Professor L e w i s has also agreed
that "laissez faire leads to incorrect
l o c a t i o n " . Therefore it is p r a c t i -
cally advantageous that location
must be planned in the interest of
the society and in the interest of
the r e g i o n . B u t r e g i o n a l - p l a n n i n g
is a double-headed Janus, It i n -
volves location-planning as w e l l as
resource-planning. Area-planning,
guided by a master-plan f o r the all-
r o u n d development of the region,
envisages a long-range inter-linked
f o r w a r d - p l a n n i n g i n respect o f i n -
ban and r u r a l sectors for achieving
an integrated intra-regional deve-
lopment of the whole regional eco-
nomy. Moreover area-planning, in
order to avoid the p i t f a l l s of leads
and lags under an isolated develop-
ment, has to carry the crusade along
w i t h other regions, guided by a
composite master-plan of inter-regi-
onal or n a t i o n a l development.
Resource-planning f o r the whole
region is an equally comprehensive
j o b . As Professor G D H Cole has
said, some of the natural and
acquired advantages in an area "are
fixed and alterable only over a long
p e r i o d as a result of new scientific
methods, whereby men can more
f u l l y control the conditions of t h e i r
environment. Others are alterable
at w i l l or may be altered at any
time by forces more or less amen-
able to control." Resource-plan-
ning, however, is not a single track
process, proceeding o n l y w i t h the
dispersal of existing i n d u s t r i a l con-
centrations, or d i r e c t i n g the loca-
t i o n of new undertakings, or chang-
ing the existing pattern of regional
or locational specialisation of la-
bour, or p r o m o t i n g greater diversifi-
cation of a g r i c u l t u r a l and i n d u s t r i a l
activities, or p r o m o t i n g better u t i l i -
zation of available m a t e r i a l resour-
ces, or f i n d i n g their new uses or
employing manpower at f u l l em-
ployment capacity or reorganising
the dispersal of p o p u l a t i o n accord-
i n g to the nature and needs of em-
ployment-opportunities. It is a m i x
of a l l advantageous ways and means.
Thus, resource-planning, inspired
by the macro-dynamics of m u l t i -
variate i n p u t - o u t p u t ratios of regi-
onal economy, injects m o b i l i t y i n t o
a static e q u i l i b r i u m and envisages
an integrated perspective p l a n n i n g
i n respect o f a g r i c u l t u r e , i n d u s t r y ,
trade, economic overheads and so-
c i a l services, f o r the u p l i f t of the
 THE ECONOMIC WEEKLY September 9, 1961

entire regional economy. As Pro- "conurbation which is known as targets, to allocate them on a regio-
fessor D o b b 1 1 has e x p l a i n e d , " m a n y London:"13 nal basis, and to see that these
factors, w h i c h were treated as con- targets are achieved." The First
stant magnitudes before, become The most s t r i k i n g example of and the Second Plans allocated a
variables, and moreover dependent regional p l a n n i n g was p r o v i d e d by prominent place to State Plans.
variables, in the p r o b l e m for solu- economic development in Soviet Regional development got further
t i o n . The transport-map m a y be Russia. Whereas, previously, i n - recognition in the I n d u s t r i a l Policy
adopted to the requirements of i n - dustrial development, f o l l o w i n g the Resolution of 1956, w h i c h clearly
dustry, as w e l l as industry moved "Ecuropeanization" of Russia by announced that "disparities in level
to the least-cost location on an Peter the Great, was m a i n l y con- of development between different
existing transport-map. New power- centrated in the West, an eastward regions should be progressively re-
sources may be developed; new shift of industry is taking place duced". It also recognised that one
mineral resources previously un- since 1928. Soviet plans, in respect of the aims of national p l a n n i n g
prospected or unexploited may be of long-term programmes for the was " t o ensure that these facilities
w o r k e d and i n d u s t r y moved to their geographical d i s t r i b u t i o n of indus- (power, transport, etc) are steadily
v i c i n i t y , instead of development be- t r y , have treated the fuel and power made available to areas, which are
ing confined to resources or raw net-work as the foundation-plan of at present lagging behind industri-
materials near the o l d centres of its structure. Under the original a l l y " . The techno-econornic survey
industry. In c o n f o r m i t y w i t h a long Electrification Plan arid later the of Bihar State conducted by the
t e r m plan, not only may whole i n - regionalisation plan of Gosplan, the N a t i o n a l Council of A p p l i e d Eco-
dustries be moved to a new location, m a i n emphasis had still to be given nomic Research, is another step
as a u n i t , but a whole industrial to the older regions, because the f o r w a r d towards regional allocation
complex, embracing a u x i l i a r y i n - t r a d i t i o n a l centres of population of resources and a balanced deve-
dustries, l i n k e d by the u t i l i z a t i o n of and of industry had for the time lopment of regional economy.
by-products as w e l l ; and where in- being to be treated as the crucial
dustry goes, there go centres of constants in the problem". The The regional pattern of the
p o p u l a t i o n and consequently mar- agenda, however, of long-term re- I n d i a n U n i o n is a product of many
kets and labour supplies also." gional p l a n n i n g had envisaged the historical factors. The administra-
future development in Ukraine, tive structure of I n d i a , before 1947.
Urals, Siberia, Caucausus. Central was distinguished by two separate
Regional Planning Asia, Baikal and trans-Baikal regi- entities k n o w n as B r i t i s h I n d i a and
Regional development, under the ons. By now "the canvas of Soviet I n d i a n States. This set-up was
urge and guidance of a free economy, Economic l i f e is of eight or nine shaped not by any rational consi-
needs a 'shot in the a r m . ' w h i c h m a i n i n d u s t r i a l regions, each raised derations, but "'by the military,
generally comes f r o m war or tech- upon the foundation of its man- p o l i t i c a l and administrative exigen-
nological changes or other 'revoIu- powcr-fuel-mineral situation." W i t h - cies or conveniences of the moment."
tionary' changes. I n the United in each region, "the order of detet- w i t h no regard to the history of the
States, the recent movement of i n - minatjon has generally been from land and its various parts, and w i t h
dustry to the South, after a long mineral and power resources to no scope for the needs and the affi-
standing stagnation, is heavily i n - heavy industry, and f r o m heavy nities of the people. When I n d i a
debted to the changes brought about industry to transport-facilities, the achieved independence in 1947, one
by the war-efforts d u r i n g the Second g r o w t h of towns and f o u n d i n g of of the major tasks of administrative
W o r l d W a r . I n Great B r i t a i n the l i g h t - i n d u s t r y w h i c h cater for the r e f o r m was the rationalisation and
i n i t i a l push came f r o m technologi- consumer." 1 4 integration of these ill-assorted ad-
cal changes in fuel and energy, ministrative units into a coherent
Regions in India and balanced pattern. By 1950,
leading f r o m the use of charcoal to
steam coal and later to electric- The story of regional development when the new constitution came i n -
energy, resulting in the geographical in India, goes back to 1916, when to force, the country got r i d of
shifts of industries and the popula- the Industrial Commission made more than 500 princely stales and
t i o n . A c c o r d i n g to Professor E A G certain recommendations for reduc- welded the units into a federating
Robinson, "the shift f r o m south and i n g the industrial congestion in U n i o n , consisting of Part A, B and
east to the n o r t h in the I n d u s t r i a l Bombay c i t y . The Reconstruction C States. T h i s r e v o l u t i o n a r y change
Revolution, the shift back from Committee of the Council recom- may be called the "first phase" of
north to south in recent years, has mended in 1944 that the industries integration of the p o l i t i c a l and ad
shifted not only the place of certain should be extended in a rational rninistrative structure of post-inde-
manufactures but also the places of manner over the whole of I n d i a and pendence I n d i a . The "second phase'
consumption, to w h i c h many f u r t h e r that every assistance should be was a bolder step, concerned w i t h
industries are m i n i s t e r i n g and has given towards the establishment of the emotional integration of various
thus reinforced the i n i t i a l move industries in such (industrially units, on linguistic and cultural
ment." 1 2 But, regional develop- underdeveloped) areas. Later the basis, for creating and r e i n f o r c i n g
ment under laissez-faire is deplor- P l a n n i n g and Development Depart- ' u n i t y out of diversity.' As a re-
ably slow and t i n g e d w i t h other ment in 1945 issued a statement on sult. States Reorganisation Commis-
undesirable consequences. Professor the industrial p o l i c y w h i c h , inter sion was appointed in December.
G D N W o r s w i c k has complained a l i a , disapproved concentration o f 1953 and was guided by certain
that " n o one p l a n n i n g the location industries, " o n economic, social, and broad p r i n c i p l e s included in its
of B r i t i s h light-industry ab initio, strategic grounds" and envisaged terms of reference, viz, (1) the pre-
that " i t w o u l d be necessary to fix servation of the u n i t y and security
could have produced the disorderly
1437
 September 9, 1961
o f I n d i a ; ( 2 ) l i n g u i s t i c and c u l t u -
ral homogeneity; (3) financial,
economic and a d m i n i s t r a t i v e consi-
d e r a t i o n s : and (4) the successful
w o r k i n g of the national p l a n . The
f i n a l reorganisation of States was
enforced in November. 1956 The
Commission had also recommended,
inter alia. that a permanent body
s h o u l d be set up to examine the
grievances regarding the alleged
neglect of the development needs of
certain areas and that an i n d u s t r i a l
location-policy should be f o r m u l a t e d
which w i l l ensure equitable d i s t r i -
b u t i o n of development expenditure.
Administrative Reorganisation
As a result of reorganisation of
States, the 28 erstwhile States were
re-shaped and reduced to 14 States
and 6 centrally administered ' t e r r i -
tories', thereby creating
w i t h i n the States on economic and
other n o n - l i n g u i s t i c considerations
establishing regional committees in
some States, and zonal councils for
promoting common development
needs of States. These regions are
at present, going t h r o u g h different
stages of economic development —
a few like South Bihar are relatively
going ahead, others have not ver
recovered f r o m stagnation,
some l i k e M a d h y a Pradesh ( because
of the B h i l a i Steel P r o j e c t ) . Western
Rajasthan ( because of Rajasthan
C a n a l ) , Southern Rajasthan
Madhya Bharat (because of the
C h a m b a l Project ) are perched f o r
an era of progress and p r o s p e r i t y .
To b r i n g economic development to
all regions and to all parts of the
country, in one f o r m or another.
t h r o u g h d i r e c t i o n or inducement, is
the real and u l t i m a t e a i m of natio-
nal p l a n n i n g . Economic p l a n n i n g
f o r regional development, as dis-
tinct f r o m town and c o u n t r y plan-
n i n g , has been defined by Professor
G D H Cole as the process of "tak-
i n g any area to w h i c h p l a n n i n g is
to be a p p l i e d as it is and consider-
i n g h o w to make the best of its
n a t u r a l and acquired resources, and
how to develop them, f r o m the
standpoint either of achieving the
highest possible total of produc-
t i o n , or of value generated by p r o -
d u c t i o n , in the area concerned, or
o f w o r k i n g its p r o d u c t i v e capacity
w i t h that of other areas so as to
achieve the largest possible value of
p r o d u c t i o n over the c o m b i n e d area
as a whole."
The major r e q u i r e m e n t f o r the
establishment of a sound base of
THE ECONOMIC W E E K L Y
regional development, is the ade- break d o w n of i n d u s t r i a l capital,
quate p r o v i s i o n of the factors of f r o m domestic ( r e g i o n a l ) and out-
production: (1) entrepreneurial side sources, is not available, but
skills, i n c l u d i n g business and capi- capital structure is distinguished by
tal m a n a g e m e n t ; (2) c a p i t a l e q u i p the f o l l o w i n g features: ( 1 ) c a p i t a l
ment and other f o r m s of c a p i t a l ; bt m a i n l y concentrated in b i g c i t i e s ;
(3) labour and s k i l l ; a n d . (4) raw- (2) 'small capital" is m a i n l y local
materials and natural resources. i n n a t u r e ; and, ( 3 ) ' b i g capital"
Thus. regional development is comes m a i n l y f r o m outside.
f u n d a m e n t a l l y a p r o b l e m of macro-
dynamic resource-allocation, t a k i n g
Role of Overheads
i n t o account the m u l t i - v a r i a t e esti-
mates of resource-requirements and Economic development of a re-
prospects of resource-availabilities, gion on the H a r r o d - D o m a r model,
or the H a r r o d i a n ' ' w a r r a n t e d rate of m a i n l y works t h r o u g h the potential
g r o w t h " blended w i t h the Keynesian growth in o u t p u t w h i c h i s com-
"effective-demand". To ignite the pounded of increases in p r o d u c t i v i t y
i n i t i a l spark of expansion under per w o r k e r and increases in the
labour-force, and is closely associat-
these circumstances a p r i m a r y i n -
ed w i t h the g r o w t h in capital stock
vestment to induce a multiplier
w i d e n i n g of capital and deepening
process, f o l l o w e d by a secondary
of c a p i t a l . Expansion of economic
investment to enforce an accelera-
regions overheads, also called 'economic in-
tion process, is r e q u i r e d in order
fra-structure", by p r o v i d i n g externa!
to introduce an u p w a r d change in
the p l a c i d subsistence economy of economies to other industries and
a region. T h i s capital movement l o w e r i n g the capital co-efficient sub-
may also lead to and therefore is sequently r e q u i r e d per unit of out-
essential (1 ) f o r r a t i o n a l i s i n g the put, makes possible a m o r e r a p i d
too r u d i m e n t a r y degree of d i v i s i o n rate of g r o w t h in f u t u r e , Given the
of labour f o r p r o m o t i n g any indus- g r o w t h in o u t p u t , as determined by
t r i a l s p e c i a l i s a t i o n : ( 2 ) f o r creating available resources, the capital co-
new-capacity or e x p a n d i n g the pre- efficient indicates the necessary in-
sent capacity to accelerate i n d u s t r i a l crease in the capital slock or i n -
while g r o w t h : a n d , ( 3 ) f o r development vestment w h i c h is r e q u i r e d by the
and efficient u t i l i z a t i o n of u n e x p l o d - p r e v a i l i n g state of technique. T h u s ,
ed or u n d e r u t i l i s e d natural re- investment-opportunities are deter-
sources. mined by ( a ) changes in p r o d u c t i -
and vity per worker: (b) population
T h i s ' i n i t i a l ' spark of investment, g r o w t h ; a n d , (c) technological de-
and its later supplements, may be velopments w h i c h control the capi-
conditioned by the considerations tal-coefficient. But this process,
that most under-developed countries p r o v i d i n g a m u l t i p l i e r to the con-
and also regions in such countries s u m p t i o n - f u n c t i o n and to the invest-
have no t r a d i t i o n s of i n d u s t r i a l i n - ment or a c c u m u l a t i o n f u n c t i o n , is a
vestment; they suffer f r o m a serious slow one, whereas a p o w e r f u l up-
shortage of capital in relation to w a r d surge of autonomous invest-
land-resources. Domestic capital ment r e i n f o r c e d by a m u l t i p l i e r ami
f o r regional development has got the an accelerator is needed f o r a r a p i d
advantages that it can pay more rate of g r o w t h . In the absence of
attention to local resources and local this, p a r t i c u l a r l y i n under-developed
requirements, can mop up or p l o u g h areas, an all-out government p r o -
in d o r m a n t savings which may g r a m m e of investment in p r o d u c t i v e
otherwise remain idle, and can u n d e r t a k i n g s as well as economic
p l o u g h back increases in income to overheads is the only remedy. In
convert area-development into a pre-independence I n d i a , according
c u m u l a t i v e and s e l f - r e i n f o r c i n g pro- to A l a k Ghosh, 1 5 d i s t r i b u t i o n of
gross p u b l i c investment in economic
cess. If. therefore. regionally-in-
overheads, between different regi-
spired and regionally owned capital
ons, shows t h a t nearly 54 per cent
cannot be sufficiently mobilized,
was concentrated in N o r t h - W e s t e r n
extra-regional capital and enterprise
and N o r t h - E a s t e r n I n d i a , the for-
has to be attracted or i n v i t e d in the
mer a b s o r b i n g a large share of in-
form of 'new-undertakings' or
vestment in i r r i g a t i o n , whereas the
'branch-plants', w h i c h tend to dep-
latter receiving a sizeable p r o p o r t i o n
lete the regions' capial-structure by
o f investment i n r a i l w a y s . I n the
the export of i n d u s t r i a l savings and
i n t e r - w a r p e r i o d , the s h i f t in the
to move away in times of depres-
direction of investment " i n f a v o u r
sion. In India, an origin-wise
1430
THE ECONOMIC WEEKLY September 9, 1961

of central a n d southern regions in- powerfully to create r e g i o n a l in- T h i s p o l i c y of dispersal and d i -

dicates not o n l y the tendency to- equalities and widen those w h i c h versification or the broader concept
wards a m o r e even regional d i s t r i - already e x i s t . " Thus in the pre- of regional or geographical m o b i l i t y
b u t i o n of investment b u t also the i n d u s t r i a l i s e d c o n d i t i o n s of r e g i o n a l of resources, is i n t i m a t e l y conducive
increasing emphasis l a i d on the p r o - economies, the i n t e r r e g i o n a l terms to and co-extensive w i t h the m o b i l i t y
vision of economic overheads f o r of trade operate w i t h a fundamen- of p o p u l a t i o n . A c c o r d i n g to Pro-
the development of areas, which tal bias, in favour of advanced re- fessor G D H Cole, ''the c o n t r o l o f
c o m m e r c i a l l y and i n d u s t r i a l l y were gions against the under-developed i n d u s t r i a l location is one aspect of
b e g i n n i n g to assume i m p o r t a n c e " regions, leading to a regional spe- the planned development of the dis-
However, these deficiencies and cialisation of economic activity based t r i b u t i o n of p o p u l a t i o n . " It is the
d r a w b a c k s i n the regional d i s t r i b u - upon the theory of comparative pattern and place of w o r k w h i c h
tion of economic overheads are being advantage, determines the pattern a n d place
progressively corrected by c a p i t a l of l i v i n g . Progress is. therefore,
outlays o n i r r i g a t i o n a n d power, i n - Regional Specialisation not only inevitably associated
dustry- and m i n i n g , and t r a n s p o r t with i n t e r n a l shifts in the struc-
and c o m m u n i c a t i o n s under the F i r s t In I n d i a , this regional specialisa- ture of p r o d u c t i o n , it is also the
and the Second Plans. tion is responsible f o r j u t e c u l t i v a - direct and immediate purpose of
t i o n in Assam and Bengal, tea in technological progress to make it
As investment follows effective
Assam and N o r t h Bengal, coffee and possible to produce the same amount
d e m a n d , expansion of a l l sectors of
rubber in South Indian States, of goods w i t h lesser number of
regional economy is i n t i m a t e l y con-
wheat in the P u n j a b . U P and Bihar, workers or m o r e amount of goods-
nected w i t h and leads to an increas-
and rice in Assam. Bengal and w i t h the same n u m b e r of workers.
i n g demand for i n t e r n a l l y (regio-
S o u t h I n d i a . Coal m i n i n g and i r o n - In either case. there is a p r o b l e m of
n a l l y ) produced goods. To become
s m e l l i n g is concentrated in the i r o n displacement, or transfer of man-
i n d u s t r i a l i s e d , a region h a v i n g m o r e
and coal belts covering south B i h a r power and material resources. Re-
t h a n SO per cent of raw-materials
and Bengal. The emergence of gional development, after the i n i t i a l
or n a t u r a l resources by weight of
M a d h y a Pradesh and Orissa. on the push and reorganisation, therefore
the m a t e r i a l requirements of an in-
coal and iron maps of I n d i a , is a tends to move towards the ideal of
d u s t r i a l a c t i v i t y must i m p o r t other
new o p e n i n g under the steel-plan- better u t i l i s a t i o n of material re-
essential materials to complement its-
ning". In the i n d u s t r i a l field, j u t e - sources and f u l l employment of man-
o w n resources and must overcome
manufacturing industry is heavily power, and a consequent inter-
transport-resistance. Otherwise, the
concentrated in West Bengal. Sugar r e g i o n a l m i g r a t i o n of p o p u l a t i o n as
region's o w n resources w i l l r e m a i n
industry was o r i g i n a l l y localised in a corrective measure for the im-
either unused or w i l l be used as
Western UP and B i h a r , but in re- balances and imperfections in the
isolated resources, so that raw-
cent years, there has been a distinct existing d i s t r i b u t i o n of p o p u l a t i o n .
materials w i l l b e ' i m p o r t e d ' f r o m
movement of s u g a r - p r o d u c i n g capa- T h i s m i g r a t i o n p r i m a r i l y takes place
other regions, thus creating an ad-
city towards Bombay and farther because, in the previous set up of
verse commodity-balance. In this
d o w n in the South, in order to reach inter-regional flows of capital and
under-developed economy, 'subsist-
ence' a g r i c u l t u r e becomes the m a m nearer the c o n s u m i n g markets. Cot- labour inputs, the losing regions
p r o p . and a m a j o r share of the ton-textile i n d u s t r y , upto 1920 was had got more working population
region's a g r i c u l t u r a l o u t p u t , except localised in Bombay. There has and less productive capital, where-
locally consumed food-crops, is p r o - been, in recent years. a change in as other regions had got away w i t h
duced for the extra-regional m a r k e t , the location of i n d u s t r y w i t h the more productive resources. Because
if processing industries are not lo- emergence of mills in D e l h i , K a n G r o w t h involves change. it is a
cated inside the r e g i o n . Whatever p u r . Bangalore, M a d u r a and other necessary concommitant of g r o w t h
industries are located inside the re- places. Now a product-wise d i v i s i o n that labour should be m o b i l e , leav-
g i o n , a substantial part is connected has taken place, whereby B o m b a y is ing one occupation or enterprise
with m a t e r i a l - o r i e n t e d or labour- mainly engaged in p r o d u c t i o n of and j o i n i n g another. Ieaving one
oriented industries and this indust- finer varieties of cotton-textiles, area and going to another.
rial capacity grows in response to w h i c h are less bulky and h i i d i - p r i e e d Immobile Population
demand o r i g i n a t i n g f r o m outside the whereas new centres are p r o d u c i n g
Indian population is on the
r e g i o n , so that these ' e x p o r t ' indust- coarse and m e d i u m - q u a l i t y cloth f o r
whole characterised by a general
ries may be considered as an alter local requirements. So f a r as the
i m m o b i l i t y —social occupational and
native to even greater outward paper and cement industries are con-
geographical. In respect of ideogra-
m i g r a t i o n of materials and labour cerned, the p r o d u c t i v e capacity is
phical immobility. Professor S
f o r c e . The pattern of trade is i m - more or less evenly d i s t r i b u t e d all
Chandrashekhar 1 6 has estimated that
mensely influenced by the pattern over I n d i a . The pre-1950 pattern of
nearly 90 per cent of the people in
of c o m m o d i t y balance. Even the i n d u s t r i a l location was. to a large
every Census have been enumerated
b a n k i n g system, if not regulated tr- extent, distinguished by concentra-
in the district in which they were
act d i f f e r e n t l y , tends to become an t i o n in relatively advanced regions
b o r n . Another 5 per cent have been
instrument of s i p h o n i n g off the being influenced by and l i m i t e d to
enumerated in the a d j o i n i n g dis-
savings f r o m poorer regions to the urbanised management and c a p i t a l . t r i c t s . and only the remaining 5 per
richer regions, where returns to H o w e v e r , as a result of planned- cent went outside their State. Thu-
c a p i t a l are h i g h a n d secure. Ac- i n d u s t r i a l i s a t i o n , dispersal o f i n d u - density of population or the land-
c o r d i n g t o G u n a r M y r d a l , market tries is s l o w l y e m e r g i n g and going man ratio is an index of the h o l d i n g
forces in a p o o r c o u n t r y " w o r k m o r e apace. power of an area and is influenced

1439
September 9, 1961 THE ECONOMIC WEEKLY

8
b y numerous factors l i k e natural W Fellner, 'The Trends and Cycles in 13
G D N Worewick, The Economics of
Economic Activity'. Full Employment'.
conditions (soil-fertility-rainfall, cli- 9
T W Schultz, 'The Organisation of
m a t e ) , level o f a g r i c u l t u r a l pros 14
M Dobb, 'Soviet Economic Develop-
Agriculture'.
p e r i t y resulting f r o m i r r i g a t i o n and 10 ment since 1917.'
W A Lewis, 'The Principles of Econo-
other f a c i l i t i e s in the region. a v a i l - mic Planning'. 15
Alak Ghosh, 'India's Economy — Its
a b i l i t y and rate of u t i l i z a t i o n of 11
M Dobb, 'Soviet Economic Development Nature and Problem",
n a t u r a l resources for i n d u s t r i a l de- since 1917.'
velopment, g r o w t h of u r b a n i s a t i o n , 12
E A G Robinson. The Structure of 16
S Chandrasekhar, 'India's Population —
employment opportunities. The Competitive Industry". Facts and Policy',
h o l d i n g power of an area, in I n d i a ,
is f u r t h e r accentuated because ( 1 ) World Trade in Agricultural Products
the m a j o r i t y of the p o p u l a t i o n is tied
A RESOLUTION a i m e d at encour- on governments of member-states of
to l a n d , as land is the chief source
aging an expansion o f world the U n i t e d N a t i o n s and specialised
of l i v e l i h o o d f o r more t h a n 70 per
commercial trade in agricultural agencies, p a r t i c u l a r l y of the h i g h l y
cent of the p o p u l a t i o n ; (2) absence
p r o d u c t s was adopted on A u g u s t 1 industrialised countries, to pursue
of a l t e r n a t i v e e m p l o y m e n t elsewhere;
by the E c o n o m i c Committee of the policies t h a t w o u l d encourage the
(3) difficulties of adjustment in other
U N E c o n o m i c and Social C o u n c i l . expansion o f w o r l d trade i n a g r i c u l -
linguistic r e g i o n s : and ( 4 ) other
t u r a l p r o d u c t s , especially b y a v o i d i n g
social factors w h i c h stand in the The resolution a p p r o v e d by 16
excessive agricultural production
way o f labour m o b i l i t y . votes to none, w i t h 2 abstentions,
a n d by avoiding p r e j u d i c i n g the
T h e ' p u l l ' factor, aided by the reaffirms the General Assembly's
trade prospects of efficient producers
'push' of poverty in b a c k w a r d re- views stressing that underdeveloped
from outside their countries and
gions, has been strengthened as a countries should be able to sell more
regions.
result of relative p r o s p e r i t y in cer- of t h e i r p r o d u c t s at stable and remu-
nerative prices and thereby finance T h e r e s o l u t i o n w o u l d i n v i t e go-
t a i n regions, viz textile and other
t h e i r economic development from vernments to consider liberalising
industries in Bombay, jute and
their earnings of f o r e i g n exchange. barriers to trade w h i c h are unduly
other industries in West Bengal,
l i m i t i n g the c o n s u m p t i o n of a g r i -
sugar 'industry in Western U P and
The Economic and Social C o u n c i l , cultural commodities f r o m under-
B i h a r , tea gardens in Assam coal
under this r e s o l u t i o n , w o u l d also call developed countries.
and iron belt of B i h a r and West
Bengal. M a n y more i n d u s t r i a l areas
arc needed and w o u l d have to be
created and developed if the 'puIl'
f a c t o r is to be strengthened and the
desired r e d i s t r i b u t i o n of p o p u l a t i o n
is to be achieved. The bold experi-
ment of integrated regional develop-
ment, u n d e r t a k e n by D a m o d a r Val-
ley C o r p o r a t i o n , on the lines of Ten-
nessee Valley A u t h o r i t y in U S A,
has to be m u l t i p l i e d . T h e develop-
ment of Rajasthan and the Danda-
karanya Scheme are expected to
become l a n d m a r k s in the composite
regional p l a n n i n g . T h e p a t t e r n of
an e x p a n d i n g economy w i l l c e r t a i n l y
rationalise the p a t t e r n of p o p u l a t i o n
d i s t r i b u t i o n and reshape industrial
location on more desirable and ad-
vantageous lines under the aegis of
national planning.

Notes
1
August Loesch, The Southern Economic.
Journal, July 1938
2
T Haavelmo, "A Study in the Theory
of Economic Evolution'".
3
Gunar Myrdal, 'Economic Theory and
Under-Developed Regions'.
4
Ibid.
5
T W Schuhz, The Organisation of
Agriculture'.
6
P Sargent-Florence, 'The Investment.
Location and Size of the Plant'.
7
J H Dale, American Economic Re-
view, May 1953 (p 181).