BCom Regional Imbalances Notes Study Material

BCom Regional Imbalances Notes Study Material

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BCom Regional Imbalances Notes Study Material
BCom Regional Imbalances Notes Study Material

BCom Regional Imbalances Notes Study Material


In India, the level of economic development varies from State to State and region to region. Balanced regional growth is necessary for the harmonious development of a federal State like India. At present, there are wide regional variations, in terms of such indicators of economic growth as per capita income, the proportion of the population living below the poverty line, and the working population in agriculture. The percentage of urban population to the total population, the percentage of workers in manufacturing industries, etc.

Regional imbalances indicate that there is a difference in the economic development of different regions like states, districts, or union territories. Even within each state, some regions are more developed while others are almost primitive. In other words, the co-existence of relatively developed and economically depressed states and even regions within each state is known as regional imbalances.

Each and every developed and developing region have its own problems of regional development. Some parts of the country are highly developed and some parts are undeveloped because of a lack of resources and facilities. Some regions are quite rich in natural resources but they are poor because they are unable to utilize their existing resources. Similarly, some regions are facing blackness of natural resources even then they are ensuring their development through technological development. (BCom Regional Imbalances Notes Study Material)

So, efforts should be made to concentrate development on those sections of our population which have remained poor and lack health and education facilities. The backward regions have to be given greater attention so that inter-region disparities are reduced. Regional imbalances may be categorized into two categories:

(i) Natural Regional Imbalances: These imbalances are occurred due to unequal distribution of natural resources by nature. Different regions have disparities in respect of natural resources, water capacity, power, coal, transport, forest, etc.

(ii) Man-made Regional Imbalances: It refers to those regions where more efforts have been made for development by giving preference for investment, subsidies, grants, etc. In India, Punjab, Gujarat, Maharashtra, Karnataka, Kerala, and Tamil Nadu are more developed and called forward States, and Orissa, Bihar, West Bengal, etc. are considered backward States because of slow economic development. (BCom Regional Imbalances Notes Study Material)


In a country like India, there are a number of socio-economic indicators which are very prominent to reflect the regional imbalances. It may be inter-State or intra-State; total or sectoral. “The fact that there are vast areas of the country which have remained backward over the year is both a challenge and an opportunity.” Some important indicators of regional imbalance in India are as below:

  1. Per Capita Income: The Government of India has just released the per capita income numbers for 2012-13 and India’s capital city Delhi has come out to have the highest per capita income in the country. Interestingly the PCI of Delhi is over 7 times higher than the State of Bihar and 4 times more than that 9 other states. Given that Delhi is a union territory, it may not be the right comparison, even then the difference is too large to take notice of.

Delhi’s per capita income for 2012-13 stood at 2,01,083 as compared to Bihar’s 22,890. PCI for 6 Indian States is not available, including Gujarat, Kerala, Mizoram, Chandigarh, Rajasthan, and Goa. (BCom Regional Imbalances Notes Study Material)

In 2012, Goa had the highest per capita income. According to a Government report in 2012, Goa leads the country with a per capita income of 1,92,652, while Bihar has the lowest with a per capita income of only 24,681. An average Goa earns 6 times more than an average Bihar.

As per the latest 2012 figures, Delhi comes in second after Goa with PCI of Rs.1,75,812 followed by Chandigarh at Rs.1,28,634 (2011) and Haryana at Rs.1,09,227 (2011). (BCom Regional Imbalances Notes Study Material)

  1. Population: With a population of over 1.27 billion, India has witnessed a huge growth in its population in the last 50 years. The population of some Indian States like Uttar Pradesh, Maharashtra, and Bihar is more than many countries around the world. The many States in India are very densely populated as compared to other states. Nearly half of India’s total population lives in five States- U.P., Maharashtra, Bihar, West Bengal, and Andhra Pradesh. (BCom Regional Imbalances Notes Study Material)
  2. Agricultural Production and Agricultural Productivity: For discussing the share of agricultural production of different States we concentrate on the production of foodgrains as it forms the major proportion of agricultural produce in India. Uttar Pradesh is in the highest position for a share of food grain production. Next stands Punjab although it is seventh in India with regard to area. M.P. is the largest state of Indian area wise but it stands third in the production of foodgrains. One of the main items of daily consumption in food is rice in Kerala, Karnataka, and Andhra Pradesh but its per hectare productivity is low in comparison to U.P., Bihar, and West Bengal.
  3. Net Domestic Product: As per record of RBI, Hand Book of Statistics for an Economy (2010-11) & CSO National Accounts Statistics, 2013-14 Maharashtra’s contribution to the National Income of India is the maximum with Net State Domestic Product crore) 7,60,308 (2012-13). The richest State of the country, Punjab contributes only a crore) 1,44,238 (2012-13).

Tamil Nadu is in the second position with NSPP (crore) of 2012-13.402.603 In the category of backward State Assam is a State which contributes minimum with NSDP (crore) 75,417 at 2004-05 prices. (BCom Regional Imbalances Notes Study Material)

  1. Infrastructure Disparities: The judgment of Infrastructural Disparities depends on the consumption of power per capita, registered vehicles per 1,000 persons, road length per 1000 sq. km of area, telecom lines per 100 persons, and percentage of irrigated area to gross cropped area. Punjab is on the highest level for per capita power consumption (2007-08) with 1,155 kWh and Gujarat is on second with 1,116 kWh. Tamil Nadu stands in the third position with 896 kWh. All the other forward states are above the national average of 509 kWh in 2007-08. Bihar and Assam are way behind at 49 kWh and 124 kWh respectively. (BCom Regional Imbalances Notes Study Material)

Treating the value of the index for all-India as 100, the relative values of infrastructure development index (IDI) in the states of India like Punjab had the highest value of IDI as 191.4, followed by Tamil Nadu and Haryana at 144.0 and 141.3 respectively. The lowest value of IDI was for M.P. (75.3), followed by Assam (78.9) and Bihar (81.1). (BCom Regional Imbalances Notes Study Material)

Although Uttar Pradesh had a value of FDI 103.3 higher than that of the all-India level, it was far behind Karnataka, W.B., and Tamil Nadu, which had relatively lower IDI values. (BCom Regional Imbalances Notes Study Material)

  1. Social Infrastructure and Human Development: On the basis of selected indicators of Human Development viz., life expectancy. literacy rate, infant mortality rate (IMR) death rate, and birth rate it is observed that there are wide disparities among different states. Kerala and to some extent Tamil Nadu has shown that it is possible to achieve higher levels of human development even with low levels of economic development. Among the backward states. Bihar, Rajasthan, and U.P. have very poor records in terms of literacy, especially female literacy. They have also failed to make adequate investments in health infrastructure and consequently have a lower life expectancy, higher infant mortality, and higher birth rate.

N.J. Kurian after making a detailed analysis of regional disparities reaches the following conclusion:

“The better-off states are able to attract a considerable amount of private investment, both domestic and foreign, to improve their development potential because of the existing favorable investment climate including better socio-economic infrastructure. The backward States are unable to attract private investment because of unfavorable investment climate including poor infrastructure. They are unable to improve the investment climate by improving the existing poor infrastructural facilities due to a lack of resources. Their lack of resources is linked to their poor development. Thus they are truly in a vicious circle.” (BCom Regional Imbalances Notes Study Material)


There are various physical, natural, and man-made factors responsible for regional imbalances. But in these factors, human factors are the most important which often is ignored in the analysis of regional imbalances.

  1. Historical Factors: During British rule, Bombay, Ahmedabad, Calcutta, Madras, and Delhi, and to a certain extent Cochin developed for trade and for administrative control of India. Goa could develop due to Portuguese rule and recently Chandigarh due to the partition of Punjab. These historical facts made these cities important business, administrative and industrial centers also. On the other hand, the uneven pattern of investment had resulted in uneven growth in some areas keeping other areas neglected.
  2. Geographical Factors: Geographical factors have an impact on the developmental activities of a developing economy. Adverse climatic factors are responsible for the poor rate of economic development. Hilly areas of North-East, J&K, Uttaranchal, and Himanchal Pradesh having hilly terrain are difficult to approach and so they have been left behind. In India there are wide climatic differences in some cases within the state of Rajasthan there are desert areas, hilly areas, and plan areas. (BCom Regional Imbalances Notes Study Material)

There are certain areas that are flood prone like Assam Bihar and Orissa due to excessive rain, and the overflowing of Brahmaputra and Ganga. Hence, neither agriculture nor industry could be developed to an optimum extent.

  1. Natural Resources: Natural resources are also responsible for regional imbalances. The mineral resources have not been equally gifted to all states. Oil in Assam, coal and iron ore in Jharkhand, W.B., and Orissa, and non-ferrous metal in Rajasthan helped the to grow fast but unfortunately, they are among the poorest states of India because of the bad environment and lack of investment opportunities.

Some States like Bihar, M.P., Orrisa, Chhattisgarh, Andhra Pradesh, Karnataka, Kerala, and W.B. are rich in forest resources to support paper and other forest-based industries. A number of paper mills have been established in these states but still, the income level of these states is lower than the average for the country. This is because forest resources have not been properly developed and high-value-added forest-based industries have not been established. (BCom Regional Imbalances Notes Study Material)

Hilly regions of North-West like H.P., U.K. are having water as a big resource for Hydro-power and irrigation. But these resources have been utilized for irrigation in Punjab, Haryana, and U.P.

  1. The Density of Population: The density of population varies widely from State to State and region to region. In the U.P. density of the population is more than in other states. Thus, putting pressure on land, and reducing the size of farm holdings are making people poor. In areas where the density of population is high, the labor should be cheaper but it is not so because of labor laws. Therefore. the industry does not benefit from high labor availability.
  2. Inadequacy of Economic Overheads: Economic overheads like transport communication facilities power, finance, technology, insurance, etc. are considered important factors for the development of a particular region. Due to the adequacy of such economic resources, some regions are getting good development Whereas due to inadequacy of such economic overheads some regions of the by i.e., N.E. region, H.P., Bihar, etc. remained much backward. (BCom Regional Imbalances Notes Study Material)
  3. Failure of Planning Mechanism: Although balanced growth has been accepted as one of the major objectives of economic planning in India in fact bad planning enlarged the disparity among states. In respect of allocating plan outlay developed states get much more favor than less developed states. Due to such a type of biased planning, the imbalance between the different regions has been continuously widening and some areas remain backward.
  4. Political Factors: The political factors have also affected growth because politics has created instability in certain states. That’s why a lot of time is spent in quarrels rather than pushing for development. Thus this political instability of the country is standing as a hurdle in the path of balanced development.
  5. Disparities in Literacy Rate: The level of literacy differs from state to state and even for the country as a whole. There are many states and areas where the literacy rate is very low, particularly in rural areas and these wide differences have created imbalances in development with low literacy rates, skilled workers, engineers, and doctors are a low percentage of the population. Bihar, Jharkhand, U.P. Rajasthan, etc. are less developed because the literacy rate is low. (BCom Regional Imbalances Notes Study Material)


Following measures are to be taken to remove regional imbalances:

(i) Problem Recognition: Problem recognition is the first step towards the removal of regional disparities. The Government (Central, State, or Local bodies are required to use proper mechanisms to identify the level of regional disparities to solve them.

(ii) Arrangement of Financial Resources: The Government should sanction adequate funds for the development of backward areas. The Central Government should take its own initiative for the development of identified backward regions. There should be credit facilities by banks and other financial institutions.

(iii) Special Area Development Programmes: Separate development programmes should be prepared for the development of hilly areas, tribal areas, and drought-prone areas. Maximum schemes of rural development should be directed towards the improvement of specific groups like small farmers and agricultural laborers located in backward areas.

(iv) Establishment of Industrial Estates: The government of India should be developed new Industrial Estates in the backward regions. New industrial policy should be formulated to enable the backward regions to have big industrial estates. Obviously, it will facilitate the removal of regional disparities.

(v) Integrated Programmes for Development: The government should prepare integrated development programmes for the development of small and cottage industries in backward areas. It is necessary to arrange all infrastructural facilities like roads, power, water supply, transport, communication, financial institutions, etc. by the government for quick development.


Balanced regional development is to be required due to following reasons:

(i) To accelerate the rate of economic development.

(ii) To promote large employment opportunities.

(iii) For the better utilization and conservation of natural and human resources.

(iv) To maintain political stability.

(v) To increase in National Income.

(vi) To save the country from foreign aggression.

(vii) To remove poverty and social evils etc.


The government of India has taken various measures for removing regional imbalances. The government also tried to influence the location of industry, taxation policy, licensing policy, infrastructural development, etc. for balanced Economic Growth. In this tune the various programmes undertaken to reduce/remove regional disparities are as below:

(i) Special area development programmes like ITDP (Integrated Tribal Development Projects), MADP (Modified Area Development Programmes), IRDP (Integrated Rural Development Programmes), ODAP (Drought Prone Area Programme), CSRE (Crash Scheme for Rural Employment), etc. have been formulated. (BCom Regional Imbalances Notes Study Material)

(ii) Incentive for promoting investment in Backward Regions.

(iii) Income tax concession for new industrial units located in backward areas.

(iv) Transport subsidy scheme for those industrial units set up in hilly, remote, and inaccessible areas.

(v) Concessional finance available from a major financial institution for setting up industrial projects in backward areas of the country.

(vi) The Central Government has also initiated a scheme of assisting State Governments in infrastructural development in identified “No-industry districts” up to one-third of the total cost of such development subject to a maximum of 2 crores.

(vii) Finance Commission of India has initiated many backwardnesses and resource transfer schemes for the transfer of funds from the Central pool to the States for balanced development. (BCom Regional Imbalances Notes Study Material)

BCom Regional Imbalances Notes Study Material

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