Regional Development and Planning in India

By: Bikramaditya K Choudhary
Development, no matter how one defines it brings disparity, though its scale and nature could be varied. A broader historical overview that maps progress in living standards is imperative to understand the development discourse.

The understanding of development depends on the way it is defined. In 1995 Jonathan Crush, a global development studies professor at Queen’s, formulated in his book ‘Power of Development’ that development depends on who defines it, and for whom. As the origin of the concept of development lay in the western world, it remained Eurocentric for a considerable period and laid significant emphasis on the ‘capitalist form of growth’, or in the ‘growth of national income’. Regional development was thus interpreted differently in different contexts; the only convergence was at a point where ‘regional development’ dealt with the process at the spatial scale.

It is important to understand why certain individuals, group and regions are poor compared to others. The reason for existing low levels of economic performance and lower levels of standard of life are often believed to be complimentary to each other.

Gunnar Myrdal, a Swedish Nobel-laureate economist, 1957, summed up ‘poor are poor, as they are poor’; explained later as the vicious cycle of poverty. The existing gaps are the result of market-oriented policy of the governments across the world. The evidence from China presented in 2004 by Sylvie Demurger et al. in their paper ‘Geography, economic policy and regional development in China’, Harvard Institute of Economic Research, reveals that the coefficient of variation, a measure of disparity,  across provinces was lower before adopting the open-door policy; however the coastal areas benefited  as compared to the rest of the country.

As noted in 2003 by economist R Mackay, in his paper ‘Twenty-five years of regional development’ published in Regional Studies, poor laws were a debilitating aspect of policy making, which over a period of time allowed the northern regions of United Kingdom to lose their industries due to the exhaustion of coal mines and also due to the shift in the mechanical source of energy—from coal to oil.

In the aftermath of the great depression in 1929 and 1930, which affected most of the capitalist economies, the concept of laissez-faire, a policy of minimum governmental interference in the economic activities of individuals and society, was opposed and active state intervention in restructuring of the economy was slowly accepted. This acceptance provided a ready market for production units. The new economic order based on Keynesian ‘demand management’, D Roosevelt’s  ‘new deal’, and Joseph Stalin’s model of ‘centralised planning’, especially top-down approach, started restructuring the economic space across the world at national and sub-national order. The initiation of regional planning in post independence India has to be placed in this context to understand the intricacies of the structure of the state, the dominant group, the capitalist production system and the people spread across regions of India.

Independent India began its journey under the rubric of a mixed economy. The years between 1952 and 1992 are normally categorised into three periods namely: ad-hoc period (1952-55), period of initiation (1956-67)’ and period of consolidated planning (1968-91).

The year 1991 remains a watershed in the economic history of India, when the ‘open economy’ format was adopted, supposedly based on global competition. Whether India benefited or not; who in India benefited; who accumulated wealth by dispossessing whom; which class emerged as a ruling class; whether the character of the ruling class remained the same across the country or became divergent across the nation-state; all have a bearing on planning processes and strategies.

The focus here is on the changing character of planning and its implications for the economy and people in the last 20-25 years. The last two-three decades of planning could be termed as ‘period of rhetoric’, as this period has seen loud claims but little action. The analysis of the plan and non-plan expenditure indicates that successive years have witnessed a systematic withdrawal of universal welfare schemes to minimise the fiscal deficit and to meet the global standard of cutting subsidy.

The debate began with a general acceptance that the process of development does not start at the same point of time and that means that some regions are behind in the process. According to multiple scholars like August Losch, Gunnar Myrdal and Francois Perroux, the reasons for this (non)uniformity is natural conditions and historically created differentiation that lead to comparative advantage based on resource endowment.

The choice of a specific location for the beginning of growth impulses depends on resource endowment, cultural factors, concessions and rebates by the state and so on. The history of Indian planning since the third five-year plan suggests that new industries, especially public sector undertakings (PSUs), were located in relatively backward regions with the imaginative outcome of bringing growth across the regions and to create a kind of ‘complex interaction across units of production’. The outcome, however remains far from bridging the gap between the core regions and the hinterland.

Development in the contemporary world is dominated by neo-liberal states that promote decentralisation, deregulation, liberalisation and a virtual global economy, resulting in more and more people and regions are getting excluded. A major concern in development economics is to find a satisfactory answer to a basic question—why do different regions (countries/states/districts) grow differently, leading to varying degrees of income and expenditure inequalities and poverty. However, there is no single answer, as there could be country or region specific factors such as governance, institutions, culture, method of intervention and so on, that play a dominant role in determining the growth path. The great inequality amongst different regions in terms of economic performance and the distribution of benefits of such economic development is an undisputed reality. There are glaring examples of various kinds of disparities at international, interstate and inter regional levels. The concentration of development in terms of accumulation and affluence in a few parts of the world or in different parts of a nation continues to remain the norm rather than the exception across the globe. Scholars like M H Suryanarayana, Indira Gandhi Institute of Development Research, Economics Programme, opine that, “tentative estimates, if valid, indicate that the growth process between 1993-94 and 2004-05 has bypassed the majority and was not inclusive and no cross-sectional evidence to believe that growth in India is inclusive”. P P Ghosh et al., Centre for Economic Policy and Public Finance, Asian Development Research Institute, in their article ‘Political Implications of Inter-State Disparity’ published in 2009 in the Economic and Political Weekly, 2009, points towards skewed development and growing inter-state disparity. S Mahendra Dev et al., Centre for Economic and Social Studies, in their book ‘India’s Development: Social and Economic Disparities’ published in 2008 note similar findings about rural poverty ratio across states.

It is also true that such disparities are larger in the poor countries and regions and, as Myrdal noted, inequalities would be larger at the outset of the development process. But, the reason behind growing inequalities in a post-industrial phase needs to be addressed anew. According to global economists, even in the most developed countries like USA or the industrial countries of Western Europe, the same scenario was observed a few decades ago, and is today on the increase again.

The process of development is said to begin with the creation of external demand, surplus, and, a comparative advantage. These, in combination, are pre-conditions for a classical as well as neo-classical conception of development. In this scenario, relative deprivation of a region is bound to increase, and it has been suggested time and again that if the state intervenes or when decentralisation begins, these disparities are likely to decrease. The reasons for disparities have been cited as multifarious, ranging from race to environmental determinism and resource endowment.

In United Kingdom, up to the mid-1970s, there was a trend towards greater regional equality in the distribution of income and wealth, but the next 25 years saw increasing regional inequalities. A similar situation has been reported from the USA where, income inequality and concentrated disadvantage have been on the rise since the 1960s, as the affluent and poor are becoming more concentrated than ever. India too, is facing similar conditions.

The idea of development in India was built on the Nehruvian concept of modernity that was based on technological advancement and industrialisation. The lack of profitability of public sector industries has been partly ascribed to the low rate of capacity utilisation—Bhilai, 65 per cent; Rourkela 48 per cent; Durgapur 30 per cent during the 1970s.  K Kalirajan et al. in their 2003 paper ‘Income inequality and convergence of income across Indian States’, and U Sankar’s ‘Economic reforms and liberalisation of the India economy,’ 2003, highlight that it was the government’s inability to maintain a high-rate of public investment and its tendency to shift its pattern of expenditure away from development-oriented projects that has had an adverse effect on the profitability of industries. This resulted in a new form of concentration of industries in different parts of the country and the regions where such industries were located become deprived, with lots of unemployed or retrenched labour force with old technical know-how, unsuitable for employment in the new industries. Limitation of technological change, missing link between production of raw materials and assembly of final product along with imbalance in industrial development has led to concentration of production and trading activities in states which have traditionally developed infrastructural facilities for large-scale production, manpower training and financial transaction.

The regional dimension is important to address specific kinds of deprivation at different sites of exclusion like dam sites, highway sites, special economics zones, industrial sites, etc. In different parts of the country, the model of socialism, the mode of oppression, the mechanism of marginalisation and processes that produce poverty and exclusion have been divergent.

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