Regional Imbalance

Regional imbalance is the disparity in the economic and social development of two regions. Regional
imbalances mean wide differences in per capita income, literacy rates, health and education
services, levels of industrialization between different regions.

 It is a condition in which an economy fails to extend benefits equally to all regions in the
country or class in society.

 This uneven economic development is either due to historical processes like colonialization
or due to socio-economic processes.

 It exists both in capitalist and socialist countries, for example, capital concentration in West
Europe and North America.

 Regional imbalance can be spatial (inter-regional imbalance such as Eastern Uttar Pradesh
and Western Uttar Pradesh, intraregional such as Uttar Pradesh and Punjab) or social (class
differentiation such as regions with the dwellings of the people from lower cast may be less
developed than that of the higher cast)

 Regional Imbalance has two dimensions

 Regional disparity and development

 Class differentiation

 Regional imbalance can further be classified into

 Inter-Regional imbalance (Eastern and Western India)

 Intra-Regional imbalance (Vidarbha and Western Maharashtra, Coastal Andhra

Pradesh is more developed, in USA North East area is more developed)

Need for Balanced Regional Development

 Within democratic polity, growth and prosperity must exhibit regional balance. Thus a
democratic government striving to achieve such balance is axiomatic.
 India is subdivided into 29 states differing in terms of their productive potential and
the type of industry they can support. The realization of their potential holds the key
to increasing the competitiveness of the nation as a whole.
 Regional disparity in development causes challenges like violent conflicts, unplanned
and haphazard migration e.g. Insurgency in North-east and Left wing extremism in
large parts of central and eastern states of India.
 The sustainability of the growth rate and the goal of the country to achieve its
development target will be difficult to meet unless India develops as an integrated
whole of regional competency.
Indicators of Regional Imbalance
 Per Capita Income:

Factors leading to regional imbalance

 Historical factors

 History of development played a great role in the development of certain

regions. E.g. in India Bombay, Calcutta, Madras are classic examples.

 The backwash effect thereafter showed its impact (backwash effect refers to sucking
of resources by developed area from nearby areas rendering them backward
whereas spread effect refers to the spread of development from more developed
area to nearby areas). North-West India including Delhi has a long agricultural and
industrial history of development.

 Further, this region remained the seat of power since medieval times. A sound work
culture involved in this region.

 The Zamindari system in Bihar with a large suppressed class has its own role in the
backwardness of the state.

 Physical factors:

 Physical factors include climate, soil, natural resource endowments, hydrology,

location, accessibility.

 Plains invite civilization, mountains push them away, deserts deny them and coasts
augment them. River valleys act as cradles of civilization.

 Availability of groundwater, river water, river transport, fertile land, and fertile soil
always attracted man’s settlement and development.

 Attitude of people, work ethos, risk-bearing capacity also play an important role. E.g.
Green revolution succeeded in North-Western India and not in Eastern parts. The
enterprising nature of Gujaratis, Marwaris, Jains led to the development of
industries and business in their region.

 Vidal De La Blache says that “river basins have functional homogeneity and are the
gravity centers of civilization where nature is protective and supportive to man”.

 Soil is the most important natural resource.

 Most river valleys and coastal areas have harbored most of humanity.

 Economic factors: economic factor includes

 Low wage rate

 Poor land man ratio

 Low standard of living

 Low per capita income

 Poor per capita consumption

 Trade pattern

 Industrialization

 Agriculture pattern and development

  Transport network

 In India, the industries are concentrated in few regions which have led to regional
imbalances.

 Demographic factors: demographic factors include

 High dependency ratio

 Low wage rate

 Unemployment

 Negative sex ratio

 Young age ratio (age structure pyramid)

 Socio-cultural factors: It includes

 Primitive mode of living (tribes)

 Inward outlook of society

 Low acceptability of innovation

 Poor education facility

 Poor health facility

 Political factors:

 The planned period after independence in terms of government policies led to

regional imbalances.

 Government policies also play a major role such as the 2nd Five Year Plan called for
the development of industries in the backward areas for their regional development,
Green revolution also led to regional imbalances since it succeeded in North-
Western India and not in Eastern parts.

 Geopolitics leading to war, cutting off supplies (oil crisis) also leads to draining of
countries resources which in turn leads to reduced government expenditure for the
development of backward areas leading to regional imbalances.

 Religion factors:

 Religion dogma and the religious perceptions which induce the cultural values and
govern the social ethos are also responsible for regional imbalances.

Consequences of Regional Imbalances in India

 Inter-States and Intra State Agitations: Uneven regional development or regional

imbalances lead to several agitations within a State or between the States.

 The erstwhile combined State of Andhra Pradesh can be cited as the best example of
the consequences of intrastate regional imbalance in terms of development, which
has led to several agitations for separate Telangana State for several decades from
1969 – 2014 finally it is formed as a separate State as the 29th State of India.
  Migration: Migration takes from backward areas to the developed areas in search of
livelihood. For example, migration from rural to urban. Because urban areas will provide a
better quality of life and more job opportunities when compared to rural.

 Social Unrest: Differences in prosperity and development lead to friction between different
sections of the society causing social unrest. For example Naxalism. Naxalites in India
function in areas that have been neglected for long time for want of development and
economic prosperity.

 Pollution: Centralization of industrial development at one place leads to air and sound
pollution.

 Loss of opportunity

 Political Instability

 Housing, Water Problem: The establishment of several industries at one place leads to a
shortage of houses as a result rental charges will increase abnormally. For example, Mumbai,
New Delhi, Chennai, and Hyderabad and overpopulation lead to the water crisis.

 Frustration among Rural Youth: In the absence of employment opportunities in rural and
backward areas leads to frustration especially among educated youth.

 Under-Developed Infrastructure: Rural and backward areas do not have 24 hours power,
proper houses, safe drinking water, sanitation, hospitals, doctors, telephone, and internet
facilities.

 Aggregation of the imbalance: Once an area is prosperous and has adequate infrastructure
for development, more investments pour in neglecting the less developed regions. So an area
which is already prosperous develops further. For example, the rate of growth of metropolitan
cities like Mumbai, Delhi, Kolkata, Chennai, Bangalore, and Hyderabad is higher compared to
other metro cities of India.

Advantages of developed region

 Natural advantage: It includes location, climate, soil, hydrology, natural resource

endowment, accessibility, etc.

 Acquired advantage: It includes the development of infrastructure, the establishment of

industries, transportation and communication network, etc.

 Comparative advantage: It includes nearness to market (e.g. Western UP is near to Delhi

which offers it a competitive advantage over Eastern UP)

 Cumulative advantage: It includes the development of social sectors, economic sector,

industrialization, urbanization, centralization of factors of production, institutional growth
and in-migration of skilled and unskilled labour.

 Agglomerative advantage: It includes the traits like capital investment, development of the
number of heavy and basic industries and related complementary industries (Here
establishment of one industry paves the way for the development of other industries by
providing them with common facilities such as power, transport, labour, etc. thus, showing
agglomerative effect).
Economic structure and imbalance
 A country based on the primary sector is usually underdeveloped. The primary sector cannot
generate income and production of a high order which leads to the low purchasing power of
people.

 Regions heavily dependent on the secondary and tertiary sectors have high demand, high
income, and high export potential, which leads to the advancement of the
economy. Thereafter the quaternary and quinary sector develops.

 Productivity and imbalance– If the efficiency of labor is more then it will increase the
productivity in an economy. Good health of workers is directly proportional to high
productivity and growth of a region

 Case Study

 Kalahandi district of Orissa is rich in mineral resources around it such as iron ore
bauxite etc which has attracted many industries in the region. But the neighboring
areas are still backward giving rise to regional imbalance.

 Similarly, the Vidarbha region of Maharashtra is backward even though Western

Maharashtra is developed.

Suggestions:

 Identification of the Backward Areas and Allocation of funds

 Need for Investments in Backward Areas

 Good Governance – the better the governance, the less would be the disparities in country.

 Political Will – Political will is vital for the balanced regional development i.e. to remove
regional imbalances in a country.

 Incentives: Incentives should be provided for promoting investments in the backward

regions.

 Promoting New Financial Institution in Backward Region.

 Setting Up of Regional Boards: As per Article 321 D of the Indian Constitution, Regional Boards
with necessary legal powers, funds should be instituted to remove regional disparities in the
States.

 Growth Corridors comprised of education zones, agricultural zones, and industrial zones
should be operationalized for the rapid development of backward areas in the states.

 Composite criteria for identifying backward areas (with the Mandal/Block as a unit) based on
indicators of human development including poverty, literacy, and infant mortality rates, along
with indices of social and economic infrastructure should be developed by the NITI Aayog.

 Devolution of funds: Union and State Governments should adopt a formula for Mandal/Block-
wise devolution of funds targeted at more backward areas.

 Strengthening of local governments and making them responsible and accountable.

  A system of rewarding States (including developed States) achieving a significant reduction in
intra-State disparities should be introduced.

 Additional funds for Infrastructure.

 A greater share of the central pool of funds should be allocated to backward states.

 Launching of Special Area Programmes like Desert Development Programme, Drought

Prone Area Programme, etc.

 Propagation and use of improved dry farming technology.

 Provision of infrastructural facilities in backward districts.

 Development of forward and backward linkages in the backward regions.

 Special grants are to be given to the backward and tribal areas.

 Schools to be opened providing free and compulsory education to remove illiteracy.

 Hospitals and dispensaries to be set up to give medical care to the people.

 Water facilities to be provided for domestic purposes and agriculture.

 Cottage and small industries are to be promoted to provide employment opportunities.

 Roads and railway lines have to be laid down to link different places.

 Government must speed up developmental works in backward areas.

Conclusion:

 Regional imbalance is a threat to the goal of inclusive growth and reduction of poverty. The
growing regional disparities have dampened the speed of further economic reforms and
hence may pose a barrier to India‟s future economic growth.

 Regional disparities will result in regional tensions, which in turn may lead to popular
agitations and at some times militant activities also.

 Regional disparities in economic and social development which exist within some of the States
due to the neglect of certain backward regions have created and creating demand for
separate States like in the past for separate Telangana and now and then for Vidarbha and
for Bodo land.

 As such, there is a strong need for strengthening good governance in the backward areas.
Towards this end, it is necessary that the local bodies in the backward areas are empowered
and strengthened to reduce the regional imbalances in the country.

# Government Interventions to Reduce Regional Disparities

Higher resource transfers from the Centre to the Backward States via;

 Planning Commission (before 2014) mainly in the form of plan transfers, and

 Finance Commission in the form of non-plan transfers. Since 1969 a Special Category
status was introduced which was in operation till 13 th Finance commission to provide greater
percentage of grants to such states from Centre.
 The table clearly shows that since
the 1st plan the Government is
continuously giving assistance to
these states.

 The large weight given to "Income Distance" by 14th Finance commission is an important step
towards plugging the gaps in per-capita income between states.

Development Programmes

 Programmes of agriculture, community development programme, Drought Prone Areas

Programme, irrigation and power, transport and communications and social services aimed
at providing basic facilities and services to people in all the regions.

Provision of Facilities in Areas which Lag Behind Industrially

 River valley projects and multi-purpose projects e.g. Narmada Dam for dry parts of Gujarat
and Madhya Pradesh, proposed Ken-Betwa inter river link project for Bundelkhand region etc.

Programmes for the Expansion of Village and Small Industries

 Village and small industries are spread all over the country and various forms of assistance
provided by the Central and State Governments are made available in the areas according to
programmes undertaken.

 Industrial estates have been set up in all States, and increasingly, they are being located in
smaller towns and rural areas.

Diffusion of industrial activity and infrastructure

 In the location of public sector projects, the claims of relatively backward areas have been
kept in view wherever this could be done without giving up essential technical and economic
criteria.

 For North east region East West Corridor project, Special Accelerated Road Development
Project (SARDP-NE) and Trans Arunachal Highway for increasing connectivity.

 There is an on-going major rail construction programme in the NER. 25 rail projects are under
way in the region of which 11 are national projects.

 Subsidies, exemptions and tax breaks given to industries for investing in backward regions.
For instance North East Industrial and Investment Promotion Policy (NEIIPP 2007) for
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and
Tripura; Special Package Scheme for Himachal Pradesh, Uttarakhand and J&K.

Schemes for Development of Backward Areas

 The Backward Region Grant Fund (BRGF) is a Programme implemented in 272 identified
backward districts in all States of the country to redress regional imbalances in development.

 BRGF consists of two funding window namely Development Grant and Capacity Building.

 Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) has been launched in September
2015 for the welfare of tribals and tribal areas and other affected by mining.
Competitive Federalism

 Competitive federalism means spirit of competition among two or more states in the matters
of trade, investment and commerce.

 States compete with each other to attract funds and investment, which facilitates efficiency
in administration and enhances developmental activities.

Way Forward

 India’s geographical diversity and different levels of development across regions mean
that location specific targeted action would be required in less prosperous regions to ensure
that a minimum acceptable level of prosperity.

 There is need to invigorate civil society in these areas as it is now well accepted in
developmental studies that the region with higher social capital tends to develop more rapidly
and sustainably.

 NITI Aayog’s Three Year Action Agenda underlines the specific action for North Himalayan
states, North-Eastern states, Coastal regions and Islands and Desert & Drought prone areas
this action plan should be diligently implemented.

Regional imbalance impedes economic development in the following way:

1) Growth becomes unsustainable: depressed rural agricultural regions with poverty and
unemployment lower purchasing power of people. As a result, overall demand in the economy comes
down affecting other two sectors of economy.

2) Unproductive use of resources in backward regions:

 Additional financial support to special category states has not yielded any desired results and
has further perpetuated poor governance. Example: Bihar despite being mineral rich state has
lower levels of development.

 Lack of education and health infrastructure result into poor social s. And hence the available
human capital is unable to contribute to the growth of the region.

3) Concentration of industries in urban areas also affects economy:

Overdeveloped urban areas with over saturated infrastructural capacities negatively affect industries
by diseconomies of congestion and higher infrastructure cost thus lowering their competitiveness.

Concentration of investment by government and private sector in major cities are at risk due to natural
calamities like cyclones. It results into massive economic losses at one go thus diversion of resources
to rebuild these growth centres. Example: coastal cities like Chennai are prone to cyclonic
disturbances.

4) Lack of inclusive growth leads to rise in social unrest, conflicts and left wing extremism. Thus
needs diversion of government resources towards security.

5) Growth of Regionalism: growing dissent against labours from other states affect industries.
Example: recent migrant labour issue in Gujarat. Lack of cheap labour affects MSME’s.

# Government initiative such as Bharat Nirman, Integrated Rural Development Programme, Tribal
sub plans, MGNREGA, Drought Prone Area Programme, Niti Aayog aspirational district plan,
Incentives for Promoting Investment in Backward Regions (Income Tax Concessions, Tax Holiday,
Transport Subsidy Scheme), Promoting New Financial Institutions in Backward Region, e-
governance promotion DBT are changing the landscape.

Weaknesses of Regional Planning in India:

(a) Refusal of richer states to transfer some of their surplus resources to the poorer states.

(b) Lack of self-reliance on the part of poorer states and thereby too much dependence on the transfer
of resources from richer states.

(c) Area development programmes for the backward areas are lacking an integrated approach.

(d) Failure of large central projects located in the backward areas to improve their economies.

(e) Non-approaching attitude of the entrepreneurs to seek concessional finance from the public sector
financial institutions.

(f) Too much concentration of Central Government investment subsidy meant for specific backward
areas into a few areas of some districts and too much of such investment subsidy on capital related
investments leading to creation of lesser employment opportunities.

(g) Lack of infrastructural facilities like power transport communication etc. and lack of adequate fiscal
and monetary incentives from state Government have led to no development of ancillary industries,
secondary and territory industries is and around those major central industrial undertakings.

(h) Lack of proper incentives offered by the state Government for tackling the problem of intra-state
imbalances existing within a state.

(i) Inadequacy of funds allotted by the State Government for the development of backward and other
special problem areas.

(j) Non-utilisation of plan outlay and loans and advances given to the states for the development of
backward areas.

# Classification based on population and resource by Ackerman

 E.A. Ackerman (1970) has used three basic criteria for formulating the world’s regional scheme
of population /resource ratio. These criteria were -Population factor, resource factor, and
technology factor. He suggested a five-fold classification of the world into
population/resource regions:

 The United States of America Types: About one-sixth of the world’s people live in
technology-source areas with low population/resource ratios, as in much of North
America, Australia, and New Zealand and the erstwhile Soviet Union

 European Type/Russian Type: One-sixth live in technology-source areas with high

population/resource ratios, where industrialization and technology have permitted
an expansion of resources through international trade. Most of Europe and Japan fall
in this category

 Egyptian Type: Roughly one-half live-in areas which are technology deficient with
high population/resource ratios, as in India, Pakistan, and China. This type epitomizes
some of the most severe population problems.
  Brazilian Type: One-sixth live in technology-deficient areas with low
population/resource ratios, as in much of Latin America, Africa and South-East Asia,
where resources sometimes remain unused because of the problems of developing
difficult environments.

 Arctic-Desert Type: The largely uninhabited ice caps, tundra’s, and deserts are mostly
technology-deficient and offer little food-producing potential at the moment.

After the 2nd World War, the world got divided into North-South blocks. It’s a geopolitical term that
explains the developed north and developing south. The division is summarized below:

 North
South
 Secondary and tertiary activity
 Primary or primitive activities.
 Colonialists  They are former colonies and exploited
by colonialist countries.
 Net exporter of goods and services  Net importer of processed goods
 Exporter of raw materials.
 Importer of raw materials

On the basis of the present world scenario and physical, social, economic, and cultural landscape of
present world classification is done on the primary scale as:

 Developed countries

 New World (Australia)

 Occidental (Europe, North America)

 Less Developed countries

 Old oriental realm

 South Asian region and new oriental region

 Meso African region

Relative characteristics of developmental disparities

 Less developed

 Low per capita income, scarce capital

 Uneven distribution of wealth in individual countries

 Primary industries like farming, forestry, mining, fishing, etc. occupy an important role
in the national economy

 A lion’s share of the population is engaged in agriculture (over 70%)

 Intensive subsistence farming is practiced. Agriculture is characterized by inefficient

methods and unemployment or pseudo employment. The yield is low.

 Most of the people live in rural areas (more than 70% of the total population in some
cases)

 High birth and death rates. High dependency ratio. Population growth is high.
  Hunger and malnutrition are all-pervasive.

 Diseases of the infection, respiratory and parasitic types are common. Health care
services are poor.

 Overcrowding, poor housing facilities, underdeveloped public and sanitation systems

prevail.

 A high level of illiteracy prevails which further prevents economic development.

 Gender disparity is high. Women are accorded an inferior status in society.

 Developed

 High per capita income, capital is easily available.

 Wealth evenly distributed within individual countries.

 Manufacturing and service industries are predominant in economies.

 Agriculture employs an insignificant percentage of the population.

 Extensive subsistence farming is practiced. Agriculture is efficient and mechanized.

The yield is high.

 Most of the people live in urban areas (more than70%)

 Both birth and death rates are low. High life expectancy.

 The supply of a balanced diet is adequate. Obesity due to overeating is a common

problem.

 Incidence of the disease is rare. Health care services are highly efficient

 Adequate housing facilities, sanitation exits. The Man-land ratio is high.

 Highly efficient and integrated educational infrastructure exists.

 The level of women’s emancipation is higher than that in developing countries.