INCOME DISPARITIES AMONG STATES IN INDIA:SIMPLIFIER
1. What Are the Causes of Regional Income Disparities in India?
• Historical Development Patterns: Developed states like Maharashtra and Gujarat benefited early from industrialization, creating a significant income gap with states like Bihar and Uttar Pradesh. For example, in 2023-24, Maharashtra’s per capita income was over 3.5 times higher than Bihar’s.
• Agricultural Dependence: States like Bihar, Madhya Pradesh, and Uttar Pradesh rely heavily on agriculture, which contributes less to GDP compared to industry and services. In 2023-24, Bihar’s per capita income was 32.8% of the national average, indicating its economic lag.
• Resource Utilization: States like Odisha have improved by tapping into their mineral resources. Odisha’s per capita income grew significantly due to investments in steel and mining, demonstrating the potential of resource exploitation.
• Investment Attraction: Karnataka and Telangana are examples of states that have benefited from foreign direct investment (FDI) and technology hubs, whereas states with poor infrastructure and governance have struggled to attract investments.
2. What Are the Effects of Income Disparities Among Indian States?
• Economic Polarization: Disparities cause states like Delhi and Sikkim to grow rapidly, with per capita income ratios rising to 250.8% and 319.1% of the national average, respectively, while other states fall behind.
• Migration Pressures: About 30% of migrants move to richer states like Maharashtra and Delhi, leading to urban overcrowding and underemployment in these states while depriving poorer states of skilled labor.
• Social Inequities: High-income states have better human development indicators. For example, Kerala’s literacy rate is 96.2%, while Bihar’s is 61.8%, reflecting access disparities.
• Political Instability: Income disparities fuel demands for regional autonomy and special economic packages, leading to policy friction and calls for better resource allocation.
3. Government Schemes and Initiatives to Address Regional Disparities
• Finance Commission: The 15th Finance Commission (2020-25) recommended grants of ₹2.95 lakh crore for states, emphasizing equitable distribution to address disparities.
• NITI Aayog: Through the Aspirational Districts Programme, NITI Aayog aims to transform 112 of India’s most underdeveloped districts by improving health, education, agriculture, and basic infrastructure.
• Panchayat Raj Institutions (PRIs): PRIs are empowered to plan and implement local development schemes, directly addressing regional needs and enhancing economic inclusion at the grassroots level.
• Special Economic Zones (SEZs): SEZs promote industrial growth in lagging regions by providing tax incentives and simplified procedures. Andhra Pradesh and Telangana have benefited significantly from SEZ policies.
• Zonal Councils: These councils facilitate inter-state cooperation and address regional issues through better coordination of development policies and sharing of resources.
4. How Can India Further Address Regional Income Disparities?
• Balanced Regional Development: The Government can enhance the Zonal Councils’ role in planning regional growth strategies and ensuring states collaborate on infrastructure projects.
• Diversification of Economies: Encourage diversification in underdeveloped states by setting up agri-processing units, technology hubs, and tourism centers.
• Education and Skill Development: Expand skill development programs like Pradhan Mantri Kaushal Vikas Yojana (PMKVY) to rural and backward regions to improve employability and economic participation.
• Decentralized Planning: Empower Panchayati Raj Institutions with funds, functions, and functionaries, ensuring that development plans are locally relevant and effectively implemented.
• Targeted Infrastructure Investments: Invest in critical infrastructure such as the Bharatmala and Sagarmala projects to improve connectivity in remote and economically backward regions.
SYNOPSIS
India faces significant regional income disparities due to historical development patterns, economic reliance on agriculture, and unequal investment distribution. To address these challenges, schemes like the Aspirational Districts Programme, decentralization efforts, and targeted regional investments are crucial.
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