TOPIC- “India and the unbalanced regional growth”

RESEARCH SUBMITTED IN PARTIAL FULFILLMENT OF

THE SUBJECT MICROECONOMICS FOR OBTAINING THE DEGREE
B.A. LL.B (Hons.) DURING ACADEMIC SESSION 2019-20.

SUBMITTED BY-
ADARSH KUMAR
ROLL NO. – 1907

SUBMITTED TO-
Dr. SHIVANI MOHAN
FACULTY FOR MICROECONOMICS

CHANAKYA NATIONAL LAW UNIVERSITY

NYAYA NAGAR, MITHAPUR, PATNA- 800001

SEPTEMBER, 2019

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 TABLE OF CONTENTS:

TABLE OF CONTENTS……………………………………………………………………………………… 2
DECLARATION………………………………………………………………………………………………… 3
ACKNOWLEDGEMENT……………………………………………………………………………………..4
CERTIFICATE…………………………………………………………………………………………………….5
RESEARCH METHODOLOGY……………………………………………………………………………..6
I. INTRODUCTION………………………………………………………8

II. SCARCITY OF RESOURCES AND ITS EFFECT ON REGIONAL GROWTH……10

III. AFFECT OF POPULATION BELOW POVERTY LINE ON ECONOMIC GROWTH……….13

IV. CONCLUSION AND SUGGESTION…………………………………………………………...15

BIBLIOGRAPHY………………………………………………….17

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 DECLARATION

I hereby declare that the project entitled “INDIA AND THE UNBALANCED REGIONAL
GROWTH” submitted by me at CHANAKYA NATIONAL LAW UNIVERSITY is a
record of bona fide project work carried out by me under the guidance of our mentor Dr
Shivani Mohan. I further declare that the work reported in this project has not been submitted
and will not be submitted, either in part or in full, for the award of any other degree or
diploma in this university or in any other university.

(ADARSH KUMAR)

Roll no. – 1907

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 ACKNOWLEDGEMENT

It is a fact that any research work prepared, compiled or formulated in isolation is

inexplicable to an extent. This research work, although prepared by me, is a culmination of
efforts of a lot of people who remained in veil, who gave their intense support and helped me
in the completion of this project.

Firstly, I am very grateful to my subject teacher Dr. Shivani Mohan, without the kind support
and help of whom the completion of this project was a herculean task for me. She donated
her valuable time from her busy schedule to help me to complete this project. I would like to
thank her for her valuable suggestions towards the making of this project.

I am highly indebted to my parents and friends for their kind co-operation and
encouragement which helped me in completion of this project. I am also thankful to the
library staff of my college which assisted me in acquiring the sources necessary for the
compilation of my project.

Last but not the least, I would like to thank the Almighty who kept me mentally strong and
in good health to concentrate on my project and to complete it in time.

I thank all of them!

ADARSH
KUMAR
Roll no. – 1907
B.A.LL.B.(Hons.)

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 CERTIFICATE

This is to certify that the project report entitled “Rising Fiscal Constraints For Government”
submitted by ADARSH KUMAR in partial fulfilment of the required for the award of degree
of B.A. LL.B(Hons.) to Chanakya National Law University, Patna is a record of the candidate’s
own work carried out by him under my supervision. The matter embodied in this project is
original and has not been submitted for the award of any other degree.

Date - _____/_____/2019.

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 RESEARCH METHODOLOGY

METHOD OF RESEARCH

The researcher will be relying on Doctrinal method of research to complete the project.
These involve various primary and secondary sources of literature and insights.

AIMS AND OBJECTIVE

- TO FIND OUT WHAT IS UNBALANCED REGIONAL GROWTH.

- TO FIND OUT HOW SCARCITY OF RESOURCES AFFECTS.
- TO FIND OUT AFFECTS OF POPULATION BELOW POVERTY LINE.

HYPOTHESES

The researcher has formulated the hypotheses, the validity of which will be checked in the
course of the project that:

- “SCARCITY OF RESOURCES AFFECTS THE REGIONAL GROWTH RATE”.

- "HIGHER THE REGIONAL POPULATION, LOWER IS THE REGIONAL

GROWTH RATE”.

LIMITATIONS OF THE STUDY

The presented research is confined to a time limit of one month and this research contains
doctrinal works, which are limited to library and internet sources and empirical research.

SOURCES OF DATA

Both primary and secondary sources.

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METHOD OF WRITING

The method of writing followed in the course of this research is primarily analytical.

MODE OF CITATION

The researcher has followed uniform mode of citation.

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 I. INTRODUCTION

Unbalanced regional growth means different level of economic development of different

regions. Taking India in consideration, ‘region’ depends upon the parameter which one uses, it
can be divided on the basis of different geographical features. In this paper it is divided on the
basis of modern state and union territories. This unbalanced growth may be inter-state or intra-
state. Economic development of any economy like India depends completely upon balanced
economic development of all regions in the country. It doesn’t mean that development rate
should be uniform rather it means that the difference in the economic development of different
regions should be minimized.

India is facing the problem of acute regional imbalances and the indicators of such imbalances
are reflected by the factors like per capita income, the proportion of population living below
the poverty line, the percentage of urban population of total population, percentage of working
population engaged in agriculture, the percentage of workers engaged in industries, infra-
structural development etc.1

A region may be known as economically backward as it is indicated by the symptoms like

excessive pressure of population on land, too much dependence on agriculture, high incidence
of rural employment and high degree of under-employment, low productivity in agriculture
and cottage industry, under urbanisation, absence of basic infra-structural facilities etc.2

There are many factors which contribute in this unbalanced regional growth, some of
them are natural and some of them are man-made. Natural reasons are due to variable
distribution of natural resources, water capacity, transport etc. Man-made imbalances are due
to different level of efforts made for development in different regions by giving special
preference for investment, subsidies, grants, etc.

Prof. N.J. Kurion has divided the regions in two categories:

(a) Regions situated in the centre of India; like, Uttar Pradesh, Orissa and Bihar etc. are
considered backward regions as far as economic development is concerned. These are also
termed as ‘Backward States’.

1
Vidya Sethy, Top 9 causes responsible for regional imbalances In India (4 September 2019, 06;40 PM),
http://www.yourarticlelibrary.com/india-2/top-9-causes-responsible-for-regional-imbalances-in-india/63001.
2
Ibid.

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(b) Regions situated at the periphery of India like Punjab, Gujarat, Karnataka, West Bengal,
Kerala, Tamil Nadu and Andhra Pradesh have developed more. We can also call these
‘Forward States’.

There are many indicators which shows the development rate of different regions like per capita
income agricultural production and agricultural productivity, Net Domestic Product,
Development of Factories and Employment, Infrastructure Disparities, etc.

The government policies have aimed in filling this widened gap between the
development rate of leading states and lagging states. It is a general trend in the development
of countries the world over for development activities to cluster around a few principal
territories in a country. This creates states within countries that are relatively developed and
others that are economically depressed. Even the US has this problem of regional disparity and
so have socialist countries such as China and Russia. The sort of imbalanced development can
exist even within states as regions less or more developed than others. Often geographical
constraints, market imperfections, government policies, a lack of law & order identity, per
capita income and various socio-economic reasons can contribute to regional disparity such
that some regions are more backward than other areas falling within the same nation.3

India followed the same path since the early period after independence. However, what can be
debated in India is whether the scale of regional disparity is higher in India than which could
be property managed to lesser effects. For example, China's policy of economically
incentivizing local level actors to form Township and Village Enterprises (TVES) for instance
has greatly contributed to reducing intra-rural inequality in China such that the Chinese
government is help in focusing on strategies to alleviate poverty within regions In India on the
other hand, intra-rural inequality remains high with many people remaining locked in poverty.4

The project will be mostly focused on the two of the many factors affecting development
of any region. These are
1) Scarcity of Resources; and
2) Population below poverty line.

3
Regional disparities in India since Independence (September 4,2019,08:32 PM),
https://www.geographyandyou.com/regional-disparities-india-since-independence/.
4
Ibid.

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 II. SCARCITY OF RESOURCES AND ITS EFFECT ON
REGIONAL GROWTH

Population growth pressures, economic growth, and climate change place tremendous
stress on finite, non-renewable resources such as fossil fuels and minerals. Demand for
these resources will only increase as fresh worldwide players emerge and join the contest
for the remaining mineral and fossil fuel deposits worldwide–particularly shale gas and
crude oil.

In response to those challenges, governments area unit ramping up their

resource economic policy efforts; China, for instance, has already considerably reduced
exports of its grouping metals. Extractive corporations are stepping into more difficult
operational environments during a bid to seek out new sources of provide, that will
increase their risk of guiltiness in fuelling violent conflicts, robbery state assets
or shoring up autocratic regimes.

Industries and countries whose economies are preponderantly smitten by non-

renewable resources also are having to rethink their assets and transition to a lot
of property growth model.

The problem of allocation of resources arises because of the scarceness of resources, and
refers to the question of that desires ought to be glad and that ought to be left unhappy.
In alternative words, what to provide and the way a lot of to provide. additional production
implies additional resources needed for the assembly of that good, and resources ar scarce.
These 2 facts along mean that, if a society decides to extend production of
some sensible, it's to withdraw some resources from the assembly of alternative product.
In alternative words, additional production of a desired {commodity trade product
goods} will be created potential solely by reducing the number of resources utilized in the
assembly of alternative goods.

The problem of allocation deals with the question of whether or not to

provide capital product or commodity. If the community decides to
provide capital product, resources should be withdrawn from the
assembly of commodity. within the end of the day, however, [investment] in

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 capital product augments the assembly of commodity. Thus, each capital
and commodity are necessary. This is determinant the optimum production quanti
tative relation between the two. Resources are scarce and it's necessary to use them
as with efficiency as potential. Thus, it's essential to grasp if the assembly Associate in
Nursing distribution of national product created by an economy is
maximally economical. the assembly becomes economical given that the productive
resources are utilized in such the way that any
reallocation doesn't manufacture additional of 1 sensible while not reducing the
output of the other sensible. In alternative words, economical distribution implies
that redistributing product cannot create anyone happier while
not creating some other person worse off.
The inefficiencies of production and distribution exist all told varieties of economies. The
welfare of the folks will be inflated if these inefficiencies ar dominated out.
Some value should be incurred to get rid of these inefficiencies. If the value of removing
these inefficiencies of production and distribution is over the gain, then it's not worthy to
get rid of them.

If Bihar and Rajasthan are compared, Bihar is one of the strongest agricultural states. The
percentage of population employed in agricultural production in Bihar is around 80 per cent,
which is much higher than the national average. It is the fourth largest producer of vegetables
& the eight largest producer of fruits in India. Food processing, dairy, sugar, manufacturing
and healthcare are some of the fast growing industries in the state. The state has planned
initiatives for the development of other sectors such as education and tourism and also provides
incentives for information technology and renewable energy.5
The state enjoys a unique location specific advantage because of its proximity to the vast
markets of eastern and northern India, access to ports such as Kolkata and Haldia and to raw
material sources and mineral reserves from the neighbouring states. The state has a large base
of cost effective industrial labour, making it an ideal destination for a wide range of industries.6

Rajasthan, the largest (area-wise) state in India, is located in the north-western part of
the subcontinent. It borders six major states in the northern, western and central parts of India.

5
Bihar state report june 2019, (5 September, 2019, 06:03 PM), https://www.ibef.org/states/Bihar.aspx .
6
Ibid.

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Rajasthan is a natural corridor between the wealthy northern and the prosperous western states,
making it an important trade and commerce centre.7
The natural resources, policy incentives, strategic location and infrastructure in the state are
favourably suited for investments in sectors such as cement, tourism, agriculture and allied
industries, mineral and mineral processing industries. The state has an agricultural economy
with nine agro-climatic zones and various types of soil that help during the cultivation of crops.
Food grain production in Rajasthan is estimated to have reached 22.58 million tonnes in 2017-
18.8
The state is the leading producer of cement grade limestone in India. Production of limestone
during 2018-19 (up to Jun 18) reached 19.26 million tonnes. Bureau of Investment Promotion
(BIP) is a nodal agency of the Government of Rajasthan that facilitates investments in various
sectors in the state. Rajasthan State Industrial Development and Investment Corporation
(RIICO) is the sole agency in the state that develops land for industrial growth.9 Domestic
Product (GSDP) of province grew at a CAGR of eleven.99 per cent between 2011-12 and
2017-18. Bihar' s per capita GSDP multiplied from US$ 490.62 in 2011-12 to US$ 655.42
in 2017-18 at CAGR of ten.25 per cent.
Between 2011-12 and 2018-19, Gross State Domestic Product (GSDP) distended at a
Compound Annual rate (CAGR) of eleven.37 per cent (in rupee terms) to US$ 128.10 billion
whereas internet State Domestic Product (NSDP) distended at a CAGR of eleven.19 per cent
(in rupee terms) to US$ a hundred and fifteen.13 billion.10

7
Rajasthan state report june 2019, (5 september, 2019, 06:07 PM), https://www.ibef.org/states/rajasthan-
presentation.
8
Ibid.
9
Ibid.
10
Ibid.

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 III. AFFECT OF POPULATION BELOW POVERTY LINE ON
ECONOMIC GROWTH

Percentage of population living below the personal income in numerous states is

another vital indicator of regional imbalance or disparities. Table 6.8 shows that proportion|the
share|the proportion} of population living below the personal income for the full country
was twenty six per cent in 1999-2000 and there have been twelve states whose percentage of
population living below the personal income have exceeded this all-India average.

Bihar, Orissa, Madhya Pradesh and Uttar Pradesh ar the four states that have the best share of
population below the financial gain} still as they need very cheap per capita income within
the country.

Again there are some states like Andhra Pradesh, West Bengal, province and Tamil
Nadu that have achieved a relatively higher per capita financial gain however instead they
maintain higher share of population living below the personal income. the most reasons behind
such poorness ar larger difference of incomes and therefore the neglect of the
backward categories of population. Again geographic region is that the state that is
maintaining the best per capita financial gain among all the states and therefore
the lowest share of population living below the personal income i.e., only 6.16 per cent as
compared to it of forty two per cent for province, 46% for Orissa and 26% for all India.

The main reasons behind this low share of poorness in geographic region and Haryana arc
their sturdy production base and higher distribution of financial gain. though geographic
area, Tamil Nadu and West Bengal having a powerful production base however they failed
to expertise a good distribution of financial gain. This has resulted a relatively higher degree
of poorness in these states in spite of getting sturdy production base.

State wise analysis of population reveals that maximum population of India is

concentrated in four states i.e. Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh
(BIMARU). The major task of Population Commission is to bring about a decline in birth rate

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in BIMARU states which are the main contributors to population growth in the country. To
step up its efforts, the outlay for the Department of Family Welfare has been increased from
Rs. 6,500 crores in the Eighth Plan to Rs. 15,120 crores in the Ninth Plan.

Bihar, U.P., Orissa and M.P are four states which have the highest percentage of population
below poverty line. Punjab is a state maintaining the status of lowest percentage of population
living below poverty line because of a strong production base and distribution of income in
Punjab.11

The most common indicator of the economic development of a society is that the per capita
annual financial gain generated by it. the extent of economic condition or the share of
population that don't have minimum financial gain to fulfil its basic needs is associate
degree indicator of the extent of economic development in addition because
the difference within the financial gain distribution.

11
Supranote 1.

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 IV. CONCLUSION AND SUGGESTION

The unbalanced regional growth in India is dependent on many factors beginning from its
geographical location to the population density residing there. This project was especially
focused on two of the factors which were (1) Scarcity of Resources and (2) population below
poverty line. Scarcity of resources can be considered as a limitation in a certain perspective
that in Bihar water is in abundance and due to its soil condition it is majorly an Agriculture
based state. Here mining is not so prevalent, in comparison to dairy production and Agricultural
production.
In case of Rajasthan, they are dependent on agriculture, mining and tourism. Here dairy based
industries are absent due to scarcity of water. Cash crops, pulses like Bajra are main agricultural
products there. Here majority of people are employed in Mining based works.

So it can be concluded that only scarcity of resources is not the reason for the unbalanced
regional growth, this difference is due to the demand of the products produced by the regions
like mining is highly demanded employment which gives a healthy return but on other hand
Agricultural based region have weak returns. In this sub section the Hypothesis was taken that
“SCARCITY OF RESOURCES AFFECTS THE REGIONAL GROWTH RATE”. This
can be termed as true as the scarcity of resources affects the regional growth.

The Population below the line of poverty directly affects the region’s GDP and per capita
income there. The population of Bihar is huge in comparison to other state and it is in the
category of overcrowded state. Although Patna’s per Capita Income is higher than many of
big cities even then when whole Bihar is considered as a single entity its GDP and per capita
income is very low. This is due to the Below poverty line population staying in villages and
backward regions. On this sub-section the hypothesis was taken as that, "HIGHER THE
REGIONAL POPULATION, LOWER IS THE REGIONAL GROWTH RATE”, this can
be termed as partially correct as population might be handy in economic growth but population
which is below the line of poverty is the major reason for the slow growth of certain regions.

Government’s policies

We shall initiate the discussion on initiatives for balanced regional growth by illustrating two
instances of initiatives in the past. One relates to agriculture and the other relates to industry,
the two most important sectors of our economy. The strategy to boost agricultural production
and to ensure food security was evolved in the mid-Sixties when the country faced a grim

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situation following two consequent years of severe draught. The strategy consisted of various
incentives to farmers to adopt high yielding seeds of wheat and paddy along with
complimentary inputs, assured minimum support prices for the output, buffer stocking of the
foodgrains and supplying the same to the States to distribute through the public distribution
system (PDS) to the consumers, especially in the deficit regions.

This is a classic case of a public policy evolved with much thought and resulted in
significant gains for the country, as a whole, for several years initially but gone sore
subsequently. Instead of adjusting the agricultural and food security policies to expand the
scope of green revolution technology to the other regions of the country, they were allowed to
be high-jacked by vested interests.

The other example of a major public policy, which had gone sore after initial success
is the industrial policy. In the Fifties, when India initiated a policy of import substitution by
starting various industries in key sectors there were very few critics both within the country
and abroad. Indeed, the industrial policy embedded in the second Five Year Plan, giving
emphasis to basic and heavy industries, was lauded equally by Russian experts as well as
western experts. That policy enabled the country to lay the foundations of an industrial base.

Gradually the ills of public sector undertakings and the stifling effects of a market
without competition became more and more evident. By late Sixties and early Seventies,
several perceptive observers noted that there was need to deregulate the industrial sector to
allow competition. Government, instead, went ahead with nationalization of more and more
key sectors of the economy and also further throttling of private sector to control
concentration of wealth and industrial power. The result was further retrogression and
immiserization of the economy.

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 BIBLIOGRAPHY

INTERNET:
https://www.ibef.org/states/Bihar.aspx
https://www.ibef.org/states/rajasthan-presentation
https://www.sciencedirect.com/topics/earth-and-planetary-sciences/resource-scarcity
https://www.ideasforindia.in/topics/governance/understanding-indias-unbalanced-
growth.html
https://www.geographyandyou.com/regional-disparities-india-since-independence/
http://www.yourarticlelibrary.com/india-2/top-9-causes-responsible-for-regional-imbalances-
in-india/63001

BOOK:
Introductory Macro Economics, NCERT, Class XII

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