Regional

Imbalance
Business Environment| Sujeet Kumar
Topics to be covered
• Concept of Regional Imbalance
• Indicators of Regional Imbalance
• Causes of Regional Imbalance
• Measures to Remove Regional Imbalance
• Tenth and Eleventh Five year Plan and Regional
Imbalance
• Survey Report
• Review
 Concept of Regional Imbalance
• “The co-existence of relatively developed and economically
depressed states and even regions within each state is known
as Regional Imbalance.”
• Regional imbalance may be;
– Natural
– Man made
– Inter-state or intra-sate,
– Total or sectorial,
• “Economic Backwardness” of a region indicated by symptoms like
high population pressure on land, excessive dependence on
agriculture, absence of large-scale urbanization, low productivity in
agriculture and cottage industries, etc.
 Indicators of Regional Imbalance
• Population
• Per Capita Income
• Growth Rate (Net State Domestic Product)
• Infrastructure
• Physical Quality of Life
– Infant Mortality Rate
– Literacy Rate
 Indicators of Regional Imbalance
• Population
Forward States Population as
(48% of Total Population) per 2001
census
Punjab 2,43,58,999
Maharashtra 9,67,52,247
Haryana 2,11,44,564
Gujarat 5,06,71,017
West Bengal 8,01,76,197
Karnataka 5,28,50,562
Kerala 3,18,41,374
Tamil Nadu 6,24,05,679
Andhra Pradesh 7,62,10,007
Backward States
(42% of Total Population)
Madhya Pradesh 6,03,85,118
Assam 2,66,55,528
Uttar Pradesh 16,60,52,859
Rajasthan 5,64,73,122
Orissa 3,68,04,660
Bihar 8,29,98,509
 Indicators of Regional Imbalance
• Per Capita Income
Per Capita Income
Forward States at current prices Rank
(2005-2006) in Rs.
Punjab 36759 3
Maharashtra 37081 2
Haryana 38832 1
Gujarat 34157 4
West Bengal 25223 9
Karnataka 27291 7
Kerala 30668 5
Tamil Nadu 29958 6
Andhra Pradesh 26211 8
Average 31798  
Backward States
Madhya Pradesh 15647 3
Assam 18598 6
Uttar Pradesh 13262 2
Rajasthan 17863 5
Orissa (2004-2005) 16306 4
Bihar 7875 1
Average 14925  
 Indicators of Regional Imbalance
• Growth Rate (Net State Domestic Product)
Annual Average
Forward States Growth Rate 1990-91 Rank
to 2004-05
Punjab 4.37% 11
Maharastra 6.06% 4
Haryana 5.37% 8
Gujarat 6.79% 3
West Bengal 6.88% 2
Karnataka 6.91% 1
Kerala 5.86% 5
Tamil Nadu 5.26% 9
Andhra Pradesh 5.65% 6
Backward States    
Madhya Pradesh 1.78% 14
Assam 3.18% 12
Uttar Pradesh 2.79% 13
Rajasthan 5.11% 10
Orissa (2004-2005) 5.52% 7
Bihar -0.99% 15
 Indicators of Regional Imbalance
• Infrastructure
Infrastructure
Forward States Development Rank
Index 1999
Punjab 187.6 1
Maharashtra 112.8 6
Haryana 137.5 4
Gujarat 124.3 5
West Bengal 111.3 7
Karnataka 104.9 8
Kerala 178.7 2
Tamil Nadu 149.1 3
Andhra Pradesh 103.3 9
Backward States  
Madhya Pradesh 76.8 14
Assam 77.7 13
Uttar Pradesh 101.2 10
Rajasthan 75.9 15
Orissa 81 12
Bihar 81.3 11
All India 100  
 Indicators of Regional Imbalance
• Physical Quality of Life
– Infant Mortality Rate

Infant Mortality
Rate
Forward States Rank
(per thousand)
in 2005
Punjab 44 4
Maharashtra 36 2
Haryana 60 9
Gujarat 54 6
West Bengal 55 7
Karnataka 50 5
Kerala 14 1
Tamil Nadu 37 3
Andhra Pradesh 57 8
Madhya Pradesh 76 15
Assam 68 11
Uttar Pradesh 73 13
Rajasthan 68 11
Orissa 75 14
Bihar 61 10
All India 58  
 Indicators of Regional Imbalance
• Physical Quality of Life
– Literacy Rate
Literacy Rate (2001)

Forward States
Total Rank Male Rank Female Rank

Punjab 69.9 5 75.6 10 63.6 4

Maharashtra 77.3 2 86.3 2 67.5 2
Haryana 68.6 7 79.3 5 56.3 8
Gujarat 70 4 80.5 4 58.6 6
West Bengal 69.2 6 77.6 6 60.2 5
Karnataka 67 8 76.3 9 57.5 7
Kerala 90.9 1 94.2 1 87.9 1
Tamil Nadu 73.5 3 82.3 3 64.6 3
Andhra Pradesh 61.1 12 70.8 13 51.2 10
Madhya Pradesh 64.1 10 76.8 7 50.3 12
Assam 64.3 9 71.9 12 56 9
Uttar Pradesh 57.4 14 70.2 14 43 14
Rajasthan 61 13 76.5 8 44.3 13
Orissa 63.6 11 75.4 11 51 11
Bihar 47.5 15 60.3 15 33.6 15
All India 65.4   76   54.3  
 Causes of Regional Imbalance
• There are certain deterrent factors which come in the way of rapid
development of a region; most important of them are:
– Geographical Isolation,
– Inadequacy of economic overheads like transport, labour, technology, etc
• Pre-independence period
• Post-independence period
• Geographical Factors
• Locational Preferences
 Measures to Remove Regional Imbalance

General Measures:
– transfer of financial resources from the Centre to the states.
– Special area development programs
– Measures to promote private investment.
 Measures to Remove Regional Imbalance
• Backwardness and Resource Transfer
Total Total assistance Percentage of
assistance in to Backward Assistance of
Plans
all states (Rs. States (Rs. Backward
Crore) Crore) States
Sixth Plan(1980-85) 16560 7590 46%
Seventh Plan (1985-90) 31420 13200 42%
Eighth Plan(1992-97) 93830 35160 37%
Ninth Plan (1997-2002) 185260 69990 38%
Tenth Plan (2002-07) 254100 91080 36%
 Measures to Remove Regional Imbalance

• Special Area Development Program

– Specific Plan schemes to develop-prone areas
– The Eleventh finance Commission identified criterion for resource
transfer,
• the relative distance of the per capita income of the state with the income of the state with highest per capita
income
• index of infrastructure development
• On the basis of new formula, backward states and special category states, taken together would receive
61.2% of total resource transfer.
 Measures to Remove Regional Imbalance

• Initiative to promote investment in backward areas

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

– State Government Incentives:

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

– Concessional Finance by major financial institutions:

– A lower rate of interest on rupee loans (9.5% as against 11.5%),
– A longer period of repayment (generally 15 to 20 years, as against 10 to 12 years),
– Participation in the risk capital or debenture issues,
– Charging only half the normal rate of underwriting commission, waving of commitment charges, etc.
 Tenth and Eleventh Five Year Plan and
Regional Disparities

• Tenth Five year plan for less developed States

– High level of Capital investment
– Initiative towards the better governance and institutional reforms to make the
targeted investment effective.
– Rashtriya Sam Vikas Yojana- RSVY (national Equal Development Plan) to support
the development initiatives in backward states and regions.
• Eleventh Five year plan for less developed States
– Pradhan Mantri Gram Swaranjayanti Swarozgar Yojana (PMGSY)
– Indira Awas Yojana
– National Rural Health Mission (NRHM)
– Sarv Shiksha Abhiyan
– Supplementary nutrition program
 Survey Report
• North: Racing up

Northern Zone
Overall Consumer Primary Law & Primary Budget &
Rank Agriculture Markets Education Order Health Infrastructure Investment Prosperity
Delhi 1 3 2 4 4 1 1 2 2
Chandigarh 2 4 1 2 1 8 4 1 1
Punjab 3 1 3 5 6 4 2 4 3
Himachal
Pradesh 4 8 4 1 2 2 3 3 4
Haryana 5 2 5 7 5 7 5 5 5
Uttrakhand 6 7 7 3 8 5 7 6 7
Jammu &
Kashmir 7 9 6 6 7 3 6 8 6
Rajasthan 8 6 8 8 3 6 8 7 8
Uttar Pradesh 9 5 9 9 9 9 9 9 9
 Survey Report
• East: Depressing

Eastern zone
Overall Consumer Primary Law & Primary Budget &
  Agriculture Infrastructure Investment
Rank Markets Education Order Health Prosperity
Mizoram 1 7 2 2 1 3 2 1 1
Sikkim 2 9 3 1 3 1 3 5 5
Arunachal
3 10 4 7 11 4 5 2 2
Pradesh
Nagaland 4 11 1 3 7 5 8 3 3
Manipur 5 4 9 4 12 2 7 10 6
Tripura 6 5 6 5 9 7 12 8 4
Assam 7 12 8 8 5 9 6 6 9
Meghyalaya 8 6 5 6 13 6 11 4 7
West Bengal 9 1 7 10 6 8 1 12 10
Chhattisgarh 10 8 10 11 2 12 9 7 8
Orissa 11 3 12 9 4 10 4 11 12
Jharkhand 12 13 11 12 8 11 13 9 11
Bihar 13 2 13 13 10 13 10 13 13
 Survey Report
• South: Stalling

Southern Zone
Overall Consumer Primary Law & Primary Budget &
Rank Agriculture Markets Education Order Health Infrastructure Investment Prosperity
Puducherry 1 1 1 3 2 7 6 1 1
Tamil Nadu 2 2 5 5 4 1 2 2 4
Kerala 3 7 4 4 1 2 1 5 5
Andaman &
Nicobar 4 6 2 2 3 5 5 7 3
Karnataka 5 5 6 6 5 3 3 3 6
Lakshadwee
p 6 3 3 1 6 6 7 6 2
Andhra
Pradesh 7 4 7 7 7 4 4 4 7
 Survey Report
• West: Stagnant

Western Zone
Overall Consumer Primary Law & Primary Budget &
Rank Agriculture Markets Education Order Health Infrastructure Investment Prosperity
Goa 1 1 1 1 4 1 2 1 1
Gujarat 2 2 5 5 2 4 3 3 4
Maharastra 3 3 4 3 3 2 1 4 5
Daman & Diu 4 5 2 2 5 6 5 2 2
Dadar & Nagar
Haveli 5 6 3 4 6 3 6 5 3
Madhya Pradesh 6 4 6 6 1 5 4 6 6
 Review

• Regional Disparities hinder the national development

• Overall development of the states can bring the better future and
prospects
• Identification of the lagers and the concerned area is very vital for
the removal of disparities
• A well developed planning and strategy can remove the disparities
• Resource transfer is an important weapon to fight against the
regional disparities.